4309 NSUARB-ML-Nov 14, 2013

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DICTUM DIGITAL INC. CERTIFIED COURT REP ORTERS

NSUARB-ML-2013-01

Matter No. M05419

NOVA SCOTIA UTILITY AND REVIEW BOARD

IN THE MATTER OF: The Maritime Link Act

- and -

IN THE MATTER OF: An Appl i cat i on by NSP MARITIME LINKINCORPORATED f or t he appr oval of t heMar i t i me Li nk Pr oj ect

__________________________________________________________

TRANSCRIPT

__________________________________________________________HEARD BEFORE: Pet er W. Gur nham, Q. C. , Chai r

Rol and A. Deveau, Q. C. , Vi ce- Chai r

PLACE HEARD: Of f i ces of t he Boar dHal i f ax, Nova Scot i a

DATE HEARD: November 14, 2013

APPEARANCES:

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__________________________________________________________

Board Counsel: S. Br uce Out house, Q. C.Ri char d Mel anson

Board Advisors: St eve Pronko P. Eng.

J ocel yn Fr aser , C. A.

Hearing Clerk: Anne Bonang, NSUARB

Electronic

Display: J ef f Goodi ne

Recorded by: Di ct um Di gi t al I nc.

Transcribed by: Di ct um Di gi t al I nc.Hal i f ax, Nova Scot i a

Audiocast by: Fi r ef l y Di gi t al Medi a I nc.

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I N D E X O F P R O C E E D I N G S

PAGE NO.

May 28, 2013

Hear i ng opens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Openi ng St at ement of NSP Mar i t i me Li nk I nc. . . . . . . . 13

Openi ng St at ement of Nova Scot i a Power I nc. . . . . . . . 19

Openi ng St at ement of t he Provi nce of Nova Scot i a. . 20

Openi ng St at ement of t he Consumer Advocat e. . . . . . . . 33

Openi ng St atement of t he Smal l Busi ness Advocat e. . 42

Openi ng St at ement of Canadi an Wi nd Ener gy. . . . . . . . . 59

Openi ng St at ement of Lower Power Rat es Al l i ance. . . 65

Openi ng St at ement of t he I ndust r i al Gr oup. . . . . . . . . 78

Openi ng St at ement of t he NS Li ber al Caucus. . . . . . . . 83

Openi ng St at ement of t he PC Caucus. . . . . . . . . . . . . . . . 90

NSPML ALTERNATIVES ANALYSIS PANEL

Di rect Exami nat i on by Mr. Smel l i e. . . . . . . . . . . . . . . 99

Openi ng St at ement of NSP Mar i t i me Li nk. . . . . . . . . . . . 115

Cross- Exami nat i on by Mr. Merr i ck. . . . . . . . . . . . . . . . 124Cr oss- Exami nat i on by Mr . Bl ackbur n. . . . . . . . . . . . . . 258

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

Hear i ng adj our ns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 302

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PAGE NO.

May 28, 2013 - Evening Session

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

ORAL PRESENTATION BY MR. BARRY ALEXANDER . . . . . . . . . . 305

ORAL PRESENTATION BY MR. BILL BLACK. . . . . . . . . . . . . . . 321

ORAL PRESENTATION BY MS. BARBARA PIKE. . . . . . . . . . . . . 336

ORAL PRESENTATION BY MR. LUCIANO LISI. . . . . . . . . . . . . 349

ORAL PRESENTATION BY MR. FRED MORLEY. . . . . . . . . . . . . . 364

ORAL PRESENTATION BY MR. JOHN HERRON. . . . . . . . . . . . . . 370

ORAL PRESENTATION BY DR. BARBARA CLOW . . . . . . . . . . . . . 380

ORAL PRESENTATION BY MS. GAIL BAIKIE. . . . . . . . . . . . . . 390

ORAL PRESENTATION BY MS. ROBERTA FRAMPTON-BENEFIEL 409

ORAL PRESENTATION BY MR. KEITH MacDONALD. . . . . . . . . . 431


May 29, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 439


Cross- Exami nat i on by Ms. Rubi n. . . . . . . . . . . . . . . . . . 459Cr oss- Exami nat i on by Ms. St ewar t . . . . . . . . . . . . . . . . 570Cross- Exami nat i on by Mr. Levy. . . . . . . . . . . . . . . . . . . 603

Cr oss- Exami nat i on by Mr . Thomson. . . . . . . . . . . . . . . . 695


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PAGE NO.

May 30, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701


Cross- Exami nat i on by Ms. Abreu. . . . . . . . . . . . . . . . . . 704Cr oss- Exami nat i on by Mr . St ewar t . . . . . . . . . . . . . . . . 717Cr oss- Exami nat i on by Mr . Younger . . . . . . . . . . . . . . . . 796Cross- Exami nat i on by Mr. Bat es. . . . . . . . . . . . . . . . . . 863Cross- Exami nat i on by Mr . Bai l l i e. . . . . . . . . . . . . . . . 871

Cr oss- Exami nat i on by Mr . Out house. . . . . . . . . . . . . . . 944


May 31, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1007

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1007


Cr oss- Exami nat i on by Mr . Out house ( Cont ’ d. . . . . . . 1010Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 1142Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 1173Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 1220Fur t her Cr oss- Exami nat i on by Ms. Rubi n. . . . . . . . . . 1248

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1251


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PAGE NO.

June 1, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1255

ENGINEERING, DESIGN, AND NSPI OPERATIONS PANEL

Di r ect Exami nat i on by Mr . Smel l i e. . . . . . . . . . . . . . . 1257Cr oss- Exami nat i on by Mr . Mahody. . . . . . . . . . . . . . . . . 1263Cr oss- Exami nat i on by Mr . Bl ackbur n. . . . . . . . . . . . . . 1289Cr oss- Exami nat i on by Mr . St ewar t . . . . . . . . . . . . . . . . 1331Cr oss- Exami nat i on by Mr . Out house. . . . . . . . . . . . . . . 1339Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 1369Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 1407

Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 1438Cross- Exami nat i on by Ms. Rubi n. . . . . . . . . . . . . . . . . . 1444

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1447


June 3, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1451

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1454

POLICY AND COMMERCIAL PANEL

Cr oss- Exami nat i on by Mr . Mer r i ck. . . . . . . . . . . . . . . . 1455Cr oss- Exami nat i on by Mr . Mahody. . . . . . . . . . . . . . . . . 1493Cross- Exami nat i on by Mr . Mi l l er . . . . . . . . . . . . . . . . . 1506Cross- Exami nat i on by Ms. Rubi n. . . . . . . . . . . . . . . . . . 1532Cr oss- Exami nat i on by Ms. St ewar t . . . . . . . . . . . . . . . . 1594

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PAGE NO.

June 3, 2013

MR. PAUL WIEBE (via teleconference)

MR. ALAIN BOISSET (via teleconference)

Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . . . . 1619Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 1621Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 1627

POLICY AND COMMERCIAL PANEL (Resumed)

Cr oss- Exami nat i on by Ms. St ewar t ( Cont ’ d) . . . . . . . 1635Cr oss- Exami nat i on by Mr . St ewar t . . . . . . . . . . . . . . . . 1661Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 1688

Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 1692Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 1700

MR. JOHN DALTON

Di r ect Exami nat i on by Mr . McGr at h. . . . . . . . . . . . . . . 1707

Openi ng St at ement of Mr . J ohn Dal t on. . . . . . . . . . . . . . 1723

Cr oss- Exami nat i on by Mr . Mahody. . . . . . . . . . . . . . . . . 1733


June 4, 2013

MR. JOHN DALTON

Cr oss- Exami nat i on by Mr . Mahody ( Cont ’ d) . . . . . . . . 1753Cr oss- Exami nat i on by Mr . Bl ackbur n. . . . . . . . . . . . . . 1786Cr oss- Exami nat i on by Ms. St ewar t . . . . . . . . . . . . . . . . 1818Cr oss- Exami nat i on by Mr . A. St ewar t . . . . . . . . . . . . . 1837Cross- Exami nat i on by Mr. Levy. . . . . . . . . . . . . . . . . . . 1909Cr oss- Exami nat i on by Mr . Younger . . . . . . . . . . . . . . . . 1971

Cr oss- Exami nat i on by Mr . B. St ewar t . . . . . . . . . . . . . 2001Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 2008Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2024

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PAGE NO.

June 4, 2013

Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 2031

CONSUMER ADVOCATE PANEL

Di r ect Exami nat i on by Mr . Mer r i ck ( Qual s) . . . . . . . 2039Cr oss- Exami nat i on by Mr . Smel l i e ( Qual s) . . . . . . . . 2043Di r ect Exami nat i on by Mr . Mer r i ck. . . . . . . . . . . . . . . 2044Di r ect Exami nat i on by Mr . Mer r i ck ( Qual s) . . . . . . . 2050Cr oss- Exami nat i on by Mr . Smel l i e ( Qual s) . . . . . . . . 2057Di r ect Exami nat i on by Mr . Mer r i ck ( Cont ’ d) . . . . . . 2058Di r ect Exami nat i on by Mr . Mer r i ck ( Qual s) . . . . . . . 2060

Di r ect Exami nat i on by Mr . Mer r i ck ( Cont ’ d) . . . . . . 2061

Openi ng St at ement of Mr . Levi t an. . . . . . . . . . . . . . . . . . 2062

Openi ng St at ement of Mr . Cher ni ck. . . . . . . . . . . . . . . . . 2076


June 5, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2085

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2086

CONSUMER ADVOCATE PANEL

Cr oss- Exami nat i on by Mr . Dal gl ei sh. . . . . . . . . . . . . . 2086Cr oss- Exami nat i on by Mr . Smel l i e. . . . . . . . . . . . . . . . 2099Cr oss- Exami nat i on by Mr . A. St ewar t . . . . . . . . . . . . . 2144Cr oss- Exami nat i on by Mr . McGr at h. . . . . . . . . . . . . . . . 2145Cr oss- Exami nat i on by Mr . Out house. . . . . . . . . . . . . . . 2194Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 2208Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2215

Cross- Exami nat i on by Ms. Rubi n. . . . . . . . . . . . . . . . . . 2230

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PAGE NO.

June 5, 2013

MR. PHILIP RAPHALS

Di r ect Exami nat i on by Mr . Nor t hey. . . . . . . . . . . . . . . 2236Di r ect Exami nat i on by Mr . Nor t hey ( Qual s) . . . . . . . 2242Cr oss- Exami nat i on by Mr . Campbel l ( Qual s) . . . . . . . 2249

Openi ng St at ement of Mr . Phi l i p Raphal s. . . . . . . . . . . 2253

Cr oss- Exami nat i on by Mr . Campbel l . . . . . . . . . . . . . . . 2269

MR. ROBERT FAGAN

Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . . . . 2303

Openi ng St at ement of Synapse Ener gy. . . . . . . . . . . . . . . 2310

Cr oss- Exami nat i on by Mr . Smel l i e. . . . . . . . . . . . . . . . 2316Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2339Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 2362Re- Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . 2366

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2368


June 6, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2373

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2373

POLICY AND COMMERCIAL PANEL (Resumed)

Cross- Exami nat i on by Mr. Levy. . . . . . . . . . . . . . . . . . . 2377

Cr oss- Exami nat i on by Mr . Out house. . . . . . . . . . . . . . . 2423Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 2432

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PAGE NO.

June 6, 2013

Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2438Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 2443Cross- Exami nat i on by Ms. Rubi n. . . . . . . . . . . . . . . . . . 2453Fur t her Cr oss- Exami nat i on by Mr . Levy. . . . . . . . . . . 2457

CABLE CONSULTING INC. PANEL (via teleconference)

Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . . . . 2461Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 2463Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2474

MORRISON PARK ADVISORS PANEL (via teleconference)

Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . . . . 2485Cross- Exami nat i on by Mr. Levy. . . . . . . . . . . . . . . . . . . 2487Quest i ons f r om Mr . Dhi l l on. . . . . . . . . . . . . . . . . . . . . . 2557Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . 2570Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . 2579Cr oss- Exami nat i on by Mr . Smel l i e. . . . . . . . . . . . . . . . 2585Re- Di r ect Exami nat i on by Mr . Out house. . . . . . . . . . . 2588

Di scussi ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2590


November 14, 2013

Hear i ng r esumes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2599

Openi ng St at ement of t he Consumer Advocat e. . . . . . . . 2606

Openi ng St atement of t he Smal l Busi ness Advocat e. . 2612

NSPML PANEL

Di rect Exami nat i on by Mr. Smel l i e. . . . . . . . . . . . . . . . 2622

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PAGE NO.

November 14, 2013

Openi ng St at ement of NSPML Panel . . . . . . . . . . . . . . . . . . . 2625

Cross- Exami nat i on by Mr. Merr i ck. . . . . . . . . . . . . . . . . 2629Cr oss- Exami nat i on by Mr . Bl ackbur n. . . . . . . . . . . . . . . 2714Cr oss- Exami nat i on by Mr . MacDonal d. . . . . . . . . . . . . . . 2739Cr oss- Exami nat i on by Mr . d’ Ent r emont . . . . . . . . . . . . . 2752Cr oss- Exami nat i on by Mr . McGr at h. . . . . . . . . . . . . . . . . 2758Cr oss- Exami nat i on by Mr . Out house. . . . . . . . . . . . . . . . 2800Quest i ons f rom Mr . Deveau. . . . . . . . . . . . . . . . . . . . . . . . 2835Quest i ons f r om The Chai r . . . . . . . . . . . . . . . . . . . . . . . . . 2874Fur t her Cr oss- Exami nat i on by Mr . McGr at h. . . . . . . . . 2887

Cr oss- Exami nat i on by Mr . Mahody. . . . . . . . . . . . . . . . . . 2888Fur t her Cr oss- Exami nat i on by Mr . Bl ackbur n. . . . . . . 2890

Hear i ng adj our ns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2894

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LIST OF EXHIBITS

EXHIBIT NO. DESCRIPTION PAGE NO.

May 28, 2013

M-104 Tear sheet s f r om t heHal i f ax Her al d/ Cape Br et onPost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

M-105 Map - At l ant i c Canada Energy Tar i f f s. . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

May 29, 2013

M-106 Renewabl e Energy I nt egr at i on

St udy Updat e. . . . . . . . . . . . . . . . . . . . . . . 443

M-107 Stabi l i t y Agreement . . . . . . . . . . . . . . . . 493

May 30, 2013

M-108 Nova Scot i a Energy Mi x 2040Pi e Gr aph. . . . . . . . . . . . . . . . . . . . . . . . . . 832

M-109 Base Load Case - Ener gy bySour ce Cat egor y by Year . . . . . . . . . . . . 971

May 31, 2013

M-110 Combi ned under t aki ngs. . . . . . . . . . . . . . 1008

June 1, 2013

M-111 Mut ual Ener gy pr ess r el ease. . . . . . . . 1269

June 3, 2013

M-112 ROE Dat a re: McShane Repl y

Evi dence. . . . . . . . . . . . . . . . . . . . . . . . . . . 1454

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LIST OF EXHIBITS


June 3, 2013

M-113 Nor t h Amer i can Wi ndpowerPr ess Rel ease. . . . . . . . . . . . . . . . . . . . . 1487

M-114 Ext r apol at i on of Exhi bi tM- 2, page 33, Fi gur e 2- 1. . . . . . . . . . . 1514

M-115 Dal t on Repor t - Repl acement Tabl e ES- 2 and Tabl e 4 -Sensi t i vi t y Case Resul t s . . . . . . . . . . . 1715

M-116 Repor t - Gul l I sl and. . . . . . . . . . . . . . . 1743

June 4, 2013

M-117 Cape Br et on Post Ar t i cl er e: Mar i t i me Li nk. . . . . . . . . . . . . . . . . 1780

M-118 Nal cor Submi ssi on t o Boar dof Commi ssi oner s of Publ i cUt i l i t i es re: Muskrat Fal l sProj ect , dated November 10,2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1931

M-119 REC Pr i ci ng Char t - Ar t i cl eRenewabl e Ener gy Wor l d. com. . . . . . . . . 1938

M-120 News Rel ease ar t i cl e f r omPremi er of NS Websi t e r e:Ener gy Pr oj ect s . . . . . . . . . . . . . . . . . . . . 1978

M-121 Tr ansl at ed Ar t i cl e f r omLe Sol ei l r e: Hydr o Quebec. . . . . . . . 1988

M-122 Er r at a t o Levi t an ( LAI )Evi dence and RI Rs . . . . . . . . . . . . . . . . . . 2045

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LIST OF EXHIBITS


June 4, 2013

M-123 Exhi bi t LAI - 10 page 1 of 1. . . . . . . . . 2045

M-124 Exhi bi t LAI - 11, page 1 of 1. . . . . . . . 2046

June 5, 2013

M-125 Excer pt f r om Boar d Deci si on2010 NSUARB 196. . . . . . . . . . . . . . . . . . . . 2086

M-126 LAI - 10 Accor di ng to WKM

Repl y Evi dence. . . . . . . . . . . . . . . . . . . . . 2103

M-127 ERCOT Qui ck Fact s . . . . . . . . . . . . . . . . . . 2137

M-128 Er r at a - Mr . Phi l i pRaphal s’ s Evi dence. . . . . . . . . . . . . . . . . 2269

M-129 Di r ect Test i mony of Geor geFoot e ( NSUARB- E- ENSC- R- 12) . . . . . . . . . 2283

M-130 Er r at a - Synapse Ener gy. . . . . . . . . . . . 2304

M-131 Di r ect Test i mony of Ti mWool f - ENSC El ect r i ci t yDSM Pl an 2012. . . . . . . . . . . . . . . . . . . . . . 2325

June 6, 2013

M-132 Pr esent at i on – Labr adorMi ni ng and Power – HowMuch and Wher e Fr om. . . . . . . . . . . . . . . 2517

M-133 Ar gus US El ectr i ci t y Repor t . . . . . . . 2538

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LIST OF EXHIBITS


November 14, 2013

M-147 Provi nce of Newf oundl and( Hansar d) 47t h GeneralAssembl y Vol ume XLVI INumber 25 ( 2nd Sessi on)dat ed November 06, 2013. . . . . . . . . . . 2643

M-148 Var i ous Boar d document sr ef er r i ng t o NSPI andAf f i l i at es Code of Conductand FAM Audi t . . . . . . . . . . . . . . . . . . . . . 2796

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LIST OF UNDERTAKINGS

NO. PAGE NO.

May 28, 2013

U-1 To pr ovi de t he oper at i ng r angef or $/ Mwh r e: Wi nd I nt egr at i onCost s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

U-2 To pr ovi de t he r ef er ence t ot he cont r act ual r i ght t o Nal corSurpl us Energy (M- 46) . . . . . . . . . . . . . . . . . . . 214

U-3 To dr af t a “Low Load” scenar i oont o Fi gur e 4- 4 of Exhi bi t M- 2. . . . . . . . . . 224

May 29, 2013

U-4 To provi de Dr af t GE Wi ndI nt egr at i on St udy t o t heBoard’ s Conf i dent i al Si te. . . . . . . . . . . . . . . 441

U-5 To pr ovi de names of t he t hreesmal l El ect r i cal Ut i l i t yProj ects f orecasted i n NL. . . . . . . . . . . . . . . 653

U-6 To pr ovi de t he On- Peak/ Of f - PeakDi vi si on by Zone ( NB & NL) . . . . . . . . . . . . . . 662

May 30, 2013

U-7 To provi de t he DSM cost s f r omENSC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717

U-8 I f avai l abl e pr ovi de a copy oft he l et t er f r om t he Pr emi er ofNew Br unswi ck t o Hydr o Quebec. . . . . . . . . . . 876

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NO. PAGE NO.

May 30, 2013

U-9 To provi de any documentat i onor cor r espondence bet ween t heProvi nce of Nova Scot i a andNSPI r egardi ng the nami ng ofMuskr at Fal l s i n t heRegul at i ons. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 879

May 31, 2013

U-10 To conf i r m t he NPV di f f er ent i alf or t he ML assumi ng a Net BackPr i ci ng Component . . . . . . . . . . . . . . . . . . . . . . . . 1022

U-11 To provi de a St r at egi st RunAnal ysi s r ef l ect i ng no pur chaseof surpl us power and no expor tof surpl us power t hr ough t heMar i t i me Li nk. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1023

U-12 To provi de whether or not t heFederal Loan Guar ant ee can beext ended t o the f ul l 50 year s

vi ce 35 year s. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1042

U-13 To advi se does t he backst opst i l l appl y at f ul l avoi dedcost beyond the 35- year poi nt[ sat i sf i ed at hear i ng] . . . . . . . . . . . . . . . . . . . 1046

U-14 To provi de a r econci l i at i ondemonst r at i ng t hat t he expect edt r ansmi ssi on t ar i f f s wi l l beequal t o or bal ance out wi t h the

capi t al and r e- di spat ched cost s. . . . . . . . . . 1061

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NO. PAGE NO.

May 31, 2013

U-15 To conf i r m t hat t he unbundl edopt i on was t he one cost ed andi ncl uded i n t he ML Al t er nat i vesAnal ysi s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1217

U-16 To provi de t he Rat e Base f or 2011and 2012 [sat i sf i ed at hear i ng] . . . . . . . . . . 1229

U-17 To pr ovi de copi es of t heSt andar d & Poor s Report r el at i ngt o t he credi t r at i ng of NSPI r e:t he ML. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1242

June 1, 2013

U-18 To provi de t her el i abi l i t y/ avai l abi l i t ypercent age numbers f or t heent i r e pr oj ect, i ncl udi ng t hel and por t i ons. . . . . . . . . . . . . . . . . . . . . . . . . . . 1347

U-19 To provi de an anal ysi s of how

t he cabl e f ai l ur e r at es of 0. 04and 0. 08 were at t ai ned. . . . . . . . . . . . . . . . . . 1354

U-20 To pr ovi de t he pr obabi l i st i canal ysi s of how t he r i sks wer eassessed and quant i f i ed. . . . . . . . . . . . . . . . . 1408

U-21 To f i l e an updat ed ver si on oft he Gates and Mi l est onesProj ect i ons i n Enerco I R- 8. . . . . . . . . . . . . . 1413

U-22 To pr ovi de a Proposed Report i ngSchedul e to i ncl ude t i mel i nesand el ement s. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1425

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NO. PAGE NO.June 3, 2013

U-30 To ver i f y who pays f or t her eservat i ons on a syst em oncei t ’ s bl ocked and what t hei ncur r ed cost s are once t he Tr ansmi ssi on has been nomi natedunder t he NB TUA. . . . . . . . . . . . . . . . . . . . . . . . 1617

U-31 Enerco/ AHB 2000 t o pr ovi de al i st of pr oposed i t ems t o bei ncl uded i n r epor t s t o t he

Boar d and how of t en t he i t emsar e t o be r epor t ed ( i ncl udi ngr eport s by NSPML and by anengi neer i ng f i r m r et ai nedby t he Boar d. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1633

U-32 To provi de a det ai l ed anal ysi sof t he Tr ansmi ssi on Tar i f fRevenues f or ML and reconci l et he di f f er ences i n t heseamount s bet ween Exhi bi t M- 110( U- 14) and Exhi bi t M- 12 ( I R- 64) . . . . . . . . . 1660

June 4, 2013

U-33 To provi de der i vat i on of t hePor t l and Cr eek l evel i zed costof $78/ MWh. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1929

U-34 To pr ovi de t he f i gur es usedt o der i ve Power Advi sory’ sest i mat es and r econci l e wi t ht he response t hat NLH i s

car r yi ng a 9. 2 cent s/ KWh ( 2010$)i n the wi nd PPAs f or new wi nddevel opment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1933

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U-35 To pr ovi de t he dat a mi ssi ng f r omt he Excel spr eadsheet at Exhi bi tM- 81( i ) Power Advi sory Out putSummar y r e: CanWEA I R- 22. 3. . . . . . . . . . . . . . 1942

U-36 To provi de t he NL DSM For ecastused i n cal cul at i ons f orpr epar at i on of t he Power Advi sor yRepor t s. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1970

U-37 To provi de a ver si on of t he

Tabl e f r om Exhi bi t M- 115 usi nga 6. 56 per cent r ate. . . . . . . . . . . . . . . . . . . . . 2031

June 5, 2013

U-38 To provi de a l i nk or a l i st ofsources concer ni ng pump st oragecost s as i t r el at es t o wi ndi nt egr at i on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2143

U-39 To provi de a r evi sed t abl e( Exhi bi t M- 45, LAI - 9)

r ef l ect i ng a net back pr i ci ngt o Woodbi ne. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2229

U-40 To provi de i nf or mat i ondet ai l i ng t he requi r ement snecessar y i n or der t o compl et ea Real Opt i on Val ue ( ROV) st udy. . . . . . . . . 2232

U-41 To provi de r esul t s of hybr i d- r unscenar i o ( Tabl e 10/ 11 f or mat )compar i ng GHG gr aphs and backup

dat a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2361

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U-42 Provi de detai l ed br eakdownof t he i nt egr at i on cost sper KWh. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2418

U-43 To r epl i cat e t he t abl e f oundat Exhi bi t M- 61, page 7 of 15usi ng t he Ar gus f i gur es f oundi n Exhi bi t M- 133. . . . . . . . . . . . . . . . . . . . . . . . 2538

U-44 To produce a demonst r at ed bandof cost s di spl ayi ng t he

pr i ci ng di f f er ences bet weenSur pl us Energy pur chased atnet back t o the NB/ NEi nt er connect ver sus Woodbi ne. . . . . . . . . . . . 2587

November 14, 2013

U-45 To pr ovi de a copy of t he Edi sonEl ectr i cal I nst i t ut e St andar dFor m - Mast er Pur chase and Sal eAgr eement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2796

U-46 To obt ai n and f i l e a document t hatdemonst r at es t he i nt er r upt i bl e l oadshowi ng t he absol ut e si ze, cl ass ofcust omer and percent age ofNewf oundl and l oad. . . . . . . . . . . . . . . . . . . . . . . 2813

U-47 To pr ovi de a descr i pt i on of anypr ot ect i on pr ovi ded under t heEner gy Access Agr eement . . . . . . . . . . . . . . . . . 2846

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NSUARB-ML-2013-01/M05419 Page 2599


Halifax, Nova Scotia1

--- Upon commencing at 9:03 a.m.2

THE CHAIR: Wel l , good morni ng,3

ever yone. Thi s i s a hear i ng on t he appl i cat i on by NSP4

Mar i t i me Li nk I ncor por at ed f or appr oval of t he Mar i t i me5

Li nk Pr oj ect . And t he pur pose of t hi s hear i ng i s t o6

exami ne whether t he condi t i ons i mposed by t he Boar d i n i t s7

J ul y deci si on have been sat i sf i ed.8

The Panel f or t hi s hear i ng i s me, I ' m9

Pet er Gur nham, and Rol and Deveau i s t he Vi ce- Chai r .10

Kul vi nder Dhi l l on, who was par t of t he Panel i n t he l ast11

hear i ng, i s out of t he count r y on an extended absence, and12

so you' r e down to t he t wo of us.13

I t hi nk we' l l st ar t wi t h appear ances,14

and we' l l st ar t wi t h NSPML.15

MR. SMELLIE: Good morni ng, Mr .16

Chai r man. J ames H. Smel l i e t oget her wi t h Rene Gal l ant .17

And al so seat ed wi t h us at t he counsel t abl e, Ms. Shel l i e18

Wool ham on behal f of NSPML.19

THE CHAIR: Thank you.20

Nova Scot i a Power.21

MS. GODBOUT: Good morni ng, Mr . Chai r .22

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Page 2600 NSUARB-ML-2013-01/M05419


Ni col e Godbout and Davi d Landr i gan f or Nova Scot i a Power,1

and we al so have wi t h us Ti m Wood f or Nova Scot i a Power .2

THE CHAIR: Thank you.3Consumer Advocat e.4

MR. MERRICK: Good morni ng. J ohn5

Merr i ck and Bi l l Mahody f or t he Consumer Advocate.6


Smal l Busi ness Advocate.8

MR. BLACKBURN: Nel son Bl ackburn and9

Paul Mi l l er f or Smal l Busi ness Advocat e.10

THE CHAIR: The Lower Power Rat es11

Al l i ance.12

MR. MacDONALD: Cr ai g MacDonal d f or13

t he Lower Power Rat es Al l i ance.14

THE CHAIR: Sor r y. Wher e ar e you, Mr .15

MacDonal d? Over t her e. Thank you.16

PC Caucus.17

MR. d'ENTREMONT: Hi , Chr i s18

d' Ent r emont and Kat i Saxt on f or PC Caucus.19

THE CHAIR: Good mor ni ng.20

Por t Hawkesbury Paper .21

(NO RESPONSE)22

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NSUARB-ML-2013-01/M05419 Page 2601


THE CHAIR: NSDOE.1

MR. McGRATH: Good morni ng. Steve2

McGr ath and Ryan Br other s f or t he Depar t ment of Energy.3


Boar d counsel .5

MR. OUTHOUSE: Good morni ng, Mr .6

Chai r . Br uce Out house, and wi t h me my part ner , Ri char d7

Mel anson. Of cour se, on t he l ef t Boar d advi sor y st af f ,8

St eve Pr onko and J ocel yn Fraser .9


A coupl e of pr el i mi nar y mat t er s. The11

exhi bi t s t hat wer e f i l ed si nce t he l ast hear i ng have been12

marked, and I ' m sure ever yone has copi es of t hem.13

Mr . Outhouse, di d you want t o say a14

wor d about t he ci r cumst ances sur r oundi ng the t r anscr i pt of15

t he t echni cal conf er ence?16

MR. OUTHOUSE: Yes, Mr . Chai r . Thank17

you.18

As I t hi nk ever ybody here knows, t he19

t echni cal conf er ence was put i n pl ace and t hey' r e of t en20

hel d i n t hese mat t er s, but not r ecor ded and not par t of21

t he of f i ci al r ecor d. I n t hi s case, because t her e wer e22

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Page 2602 NSUARB-ML-2013-01/M05419


goi ng t o be no I Rs, i t was under st ood t hat t he t r anscr i pt1

woul d be - - sorr y, t hat t he t echni cal conf er ence woul d be2

r ecor ded, a t r anscr i pt pr epar ed and ci r cul at ed t o al l3part i es.4

I n ef f ect , i t was i n l i eu of wr i t t en5

I Rs and r esponses t hat t he i nf or mat i on t hat was gi ven at6

t he t echni cal conf er ence coul d be used by par t i es i n7

pr epar i ng t hei r wr i t t en evi dence, and t hat has been done,8

as you' r e awar e f r om r eadi ng t he evi dence, t hat par t i es9

coul d use t he t r anscr i pt f or pur poses of cr oss-10

exami nat i on.11

So I suggest t hat t he Boar d t r eat t he12

t r anscri pt as i t st ands as a subst i t ut e f or wr i t t en I Rs13

and can t r eat t he evi dence - - not evi dence, t he st at ement s14

made at t hat - - by t he r esponder s, not t he quest i oner s, at15

t he t echni cal conf er ence as evi dence f or pur poses of t hi s16

pr oceedi ng.17

As a r esul t of t hat , obvi ousl y i f any18

of t he persons who made such st at ement s are aware now t hat19

t hey wer e i n er r or , t hen t hat shoul d be cor r ect ed. I f20

t her e ar e t ypos i n t he t r anscr i pt t hat peopl e ar e awar e of21

and t hat need t o be cor r ect ed so t hat t he evi dence i s22

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NSUARB-ML-2013-01/M05419 Page 2603


cor r ect , t he Boar d shoul d al so be made aware of t hose1

cor r ecti ons.2


Any comment s on t hat ? Then I t ake i t4

t hat ' s agr eed?5

J ust so peopl e ar e awar e of i t - - -6

MR. OUTHOUSE: Mr . Chai r man.7

MR. GALLANT: Sor r y, Mr . Chai r man.8

THE CHAIR: Sor r y.9

MR. GALLANT: And f ol ks may know t hi s10

because I t hi nk the emai l went t o al l t he par t i es, but11

t her e was one er r or t hat was brought t o our at t ent i on,12

whi ch was Mr . Raphal s' s name was r ecor ded i ncor r ect l y i n13

t he t r anscr i pt , so wher ever t hat i ncor r ect name i s, i t14

shoul d be Raphal s.15

I j ust don' t r emember exact l y how i t16

was r ecor ded, but i t was an er r or .17

THE CHAIR: Okay. I don' t r ecal l18

seei ng t hat , so you coul d j ust make sure t he Cl er k' s awar e19

o f tha t - - -20

MR. GALLANT: We wi l l .21

THE CHAIR: - - - and t hat wi l l get t o22

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Page 2604 NSUARB-ML-2013-01/M05419


us.1

MR. OUTHOUSE: Actual l y, consi st ent l y2

t hr oughout , he was r ef er r ed t o, as I bel i eve, i t ' s R- a- t -3l - e - - -4

THE CHAIR: Oh, sor r y, hi s name was5

spel l ed wr ong.6

MR. OUTHOUSE: - - - or somet hi ng l i ke7

t hat r at her t han Raphal s.8

THE CHAIR: Okay, I di d not i ce t hat .9

I t hought you meant he was speaki ng and somebody el se was10

cr edi t ed wi t h hi s wor ds. Okay.11

And j ust so you know, t he order of12

cr oss- exami nat i on of t he NSPML panel wi l l be t he Consumer13

Advocate, t he Smal l Busi ness Advocate, t he Lower Power14

Rat es Al l i ance, t he PC Caucus, Por t Hawkesbur y Paper , i f15

t hey ar r i ve, NSDOE, and Boar d counsel .16

Any ot her pr el i mi nar y mat t er s?17

Then we have counsel openi ng18

st atement s. I wasn' t sure whet her t he NSPML st atement was19

a counsel Openi ng St at ement or a panel Openi ng St atement ,20

but - - -21

MR. SMELLIE: I t ' s i nt ended t o be a22

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NSUARB-ML-2013-01/M05419 Page 2605


panel Openi ng St atement , Mr . Chai r . I do not have an1

Openi ng St atement .2

THE CHAIR: Okay. So Mr . Mer r i ck,3

we' l l st ar t wi t h you.4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

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Page 2606 NSUARB-ML-2013-01/M05419


OPENING STATEMENT - CONSUMER ADVOCATE1

MR. MERRICK: Thank you, Mr . Chai r man.2

At t he hear i ng of t hi s appl i cat i on,3NSPML and Emera acknowl edged that t he cost t o r at epayer s4

of t he Nova Scot i a bl ock and suppl ement al energy was hi gh.5

As not ed by t he Boar d, t hat energy woul d not meet t he6

r egul at ed r equi r ement of bei ng at t he l owest l ong- t er m7

cost f or r at epayer s.8

Key t o t he appl i cat i on was t he9

pr ovi si on of sur pl us Nal cor ener gy, whi ch woul d be10

avai l abl e at market pr i ces and t hen bl ended wi t h t he Nova11

Scot i a bl ock pr i ce, whi ch woul d br i ng t he t ot al cost down12

t o meet t he assumpt i ons of Fi gur e 4. 4 i n I R- 37.13

Because access was key t o t he14

appl i cat i on sat i sf yi ng t he regul at ed r equi r ement , t he15

Boar d i mposed a condi t i on r equi r i ng a commi t ment by Nal cor16

t o gi ve access t o suf f i ci ent mar ket - pr i ced ener gy t o meet17

t he assumpt i ons.18

Assumi ng Nal cor was prepared t o gi ve19

t he commi t ment s descr i bed at t he hear i ng, t he pr ovi si on of20

such a commi t ment shoul d have been a st r ai ght f orward and21

si mpl e mat t er , but t hat has not been t he case. What has22

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been f i l ed wi t h t hi s Boar d i s a commi t ment whi ch has1

subst ant i al changes f r om t he assumpt i ons at t he hear i ng.2

The i ssue on t hi s compl i ance f i l i ng i s3

whet her t he commi t ment now put bef ore t he Board pr ovi des4

f or suf f i ci ent access f or mar ket - pr i ced ener gy t hat i t5

woul d r esul t i n t he l owest l ong- t er m cost t o r at epayer s.6

To put i t anot her way, i s t he7

commi t ment f i l ed wi t h t he Boar d of suf f i ci ent val ue t hat8

i t j ust i f i es payi ng t he hi gh cost of t he Nova Scot i a9

bl ock?10

I t i s t he posi t i on of t he Consumer11

Advocat e t hat t he Energy Access Agr eement , or EAA, does12

not sat i sf y the condi t i on f or t he f ol l owi ng r easons.13

Fi r st , t he quant i t y of ener gy pr ovi ded14

by t he EAA i s si gni f i cant l y l ess t han t he - - t han15

i dent i f i ed i n t he appl i cat i on as bei ng t he amount r equi r ed16

t o br i ng t he bl ended pr i ce down t o meet t he requi r ement of17

t he r egul at i ons. The maxi mum amount whi ch i s commi t t ed18

under t he EAA i s an average of 1. 2 t erawat t hour s over t he19

24- year t er m of t he agr eement . That i s a t ot al of 28. 820

t er awat t hour s.21

The amount of mar ket - pr i ced ener gy22

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Page 2608 NSUARB-ML-2013-01/M05419


t hat was r equi r ed under t he t er ms of t he or i gi nal1

appl i cat i on t o pr ovi de suf f i ci ent bl endi ng was a t ot al of2

39. 8 ter awat t hour s over t he same 24- year per i od.3 Ther e ar e var i ous cal cul at i ons of t he4

shor t f al l whi ch have been pr esent ed i n evi dence. Whi l e5

t he number s may be conf usi ng, what i s cl ear i s t hat t her e6

i s a substant i al short f al l .7

I n our vi ew, t he shor t f al l i s8

i ncr eased by the f act t hat Nal cor ' s r equi r ement s t o bi d or9

del i ver ener gy i s r educed t o t he extent t hat Nal cor10

r equi r es such energy t o meet nat i ve Newf oundl and l oad.11

And I r ef er t her e t o t he Cl ause 4( e) of t he agr eement .12

The short f al l i s i ncr eased by t he f act13

t hat t he amount of energy whi ch Nal cor i s commi t t ed t o14

pr ovi de i s r educed by ener gy suppl y that i s out si de of t he15

agr eement s, ener gy t hat i s bi d t hat i s not accept ed, and16

f orecast energy t hat exceeds t he Nova Scot i a Power17

sol i ci t at i on and t hat i s - - and t hat i s not suppl i ed.18

Second, t her e ar e now condi t i ons19

at t ached t o t he energy i n quest i on whi ch make t he energy20

l ess at t r act i ve and usef ul t o NSPI . The condi t i ons21

r equi r e NSPI t o commi t t o energy pur chases up t o a year i n22

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NSUARB-ML-2013-01/M05419 Page 2609


advance. Nal cor can al so i nt er r upt t he del i ver y of any1

ener gy at i t s opt i on by as much as a year .2

The condi t i ons i ncr ease t he l i kel i hood3

t hat NSPI wi l l t ake l ess of t he Mar i t i me Li nk ener gy and4

wi l l i nst ead make ener gy acqui si t i ons on mar ket t er ms t hat5

ar e avai l abl e at t hat t i me.6

Thi r d, t he pr i ci ng mechani sm of t he7

EAA r esul t s i n Nal cor bei ng abl e t o char ge at t he hi ghest8

mar ket pr i ce bet s avai l abl e t o Nal cor , r egar dl ess of9

whet her Nal cor act ual l y sel l s at t hat pr i ce. The quest i on10

can be asked; why ar en' t t he rat epayer s of NSPI ent i t l ed11

t o a mar ket pr i ce whi ch i s at t he l ow end of t he mar ket ?12

Four t h, t o t he extent t hat NSPI goes13

t o the mar ket t o acqui r e ener gy, ei t her because ther e i s14

none avai l abl e under t he EAA or because t he t erms and15

pr i ci ng of t he EAA ener gy i s t oo r est r i ct i ve or not16

suf f i ci ent l y compet i t i ve, t hose acqui si t i ons cannot be17

used t o bl end down t he cost of t he Nova Scot i a bl ock. I n18

eval uat i ng t he appl i cat i on, t he onl y mar ket - pr i ced ener gy19

t hat can be t aken i nt o account i n cal cul at i ng t he t ot al20

bl ended cost t o r at epayer s i s ener gy whi ch i s avai l abl e t o21

NSPI as a r esul t of t he EAA.22

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Energy made avai l abl e t o NSPI t hrough1

t he EAA wi l l be suf f i ci ent l y di mi ni shed quant i t y and at2

pr emi um mar ket pr i ci ng such t hat as a r esul t of bl ended3cost s, t he Nova Scot i a r at epayer s of t he ener gy avai l abl e4

under t he Mar i t i me Li nk Appl i cat i on wi l l be si gni f i cant l y5

hi gher t han t he assumpt i ons at Fi gur e 4. 4 i n I R- 37.6

To put i t anot her way, t he val ue t o7

NSPI of t he pr ovi si ons of t he EAA ener gy i s not of8

suf f i ci ent val ue t hat i t j ust i f i es payi ng t he hi gh cost of9

t he Nova Scot i a bl ock.10

I t i s t he posi t i on of t he Consumer11

Advocate t hat t he commi t ment s i n the EAA do not r esul t i n12

t he l owest l ong- t er m cost t o Nova Scot i a r at epayer s. The13

compl i ance f i l i ng shoul d be rej ect ed.14

The Consumer Advocat e wi shes t o15

comment on a f undament al i ssue that ar i ses agai n i n thi s16

t r ansact i on i n connect i on t o the rel at i onshi p bet ween17

Emer a and NSPI . Thi s t r ansact i on i s anot her exampl e of18

Emer a seeki ng to l ever age t he cash f l ow of r at e revenue t o19

t he advant age of Emera by havi ng NSPI i ncur t he capi t al20

cost s of t he pr oj ect , t hus pr ovi di ng Emer a wi t h an21

oppor t uni t y f or a r el at i vel y r i sk- f r ee r at e of r et ur n.22

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I n or der t o do t hat , ener gy1

acqui si t i on ar r angement s are ent er ed i nt o t hat ar e mor e2

convol ut ed t han need to be and whi ch br i ng wi t h t hem3

i ncrease r i sks t hat ar e r el at ed t o t he f ee of t he4

r at epayer .5

I n t he negot i at i on of t hese6

t r ansact i ons, t he i nt er est s of Emer a ar e apt l y and wel l -7

r epr esent ed, but t he i nt er est s of t he r at epayer ar e not at8

t he t abl e. These pr obl ems ar i se because t he ent i t y whi ch9

i s commi t t i ng t o pay the cost s i s not t he ent i t y whi ch has10

t o pay the cost s.11

The Consumer Advocat e acknowl edges12

t hat t hi s br oader i ssue i s not di r ect l y bef or e t he Boar d13

i n t hi s pr oceedi ng, but i t i s a concer n t hat under l i es14

t hi s proceedi ng and a number of ot her t r ansact i ons whi ch15

Emera and NSPI have ent ered i nto.16

Thank you.17

THE CHAIR : Thank you.18

Mr . Bl ackbur n?19

MR. BLACKBURN: Thank you, Mr . Chai r .20

21

22

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OPENING STATEMENT - SMALL BUSINESS ADVOCATE1

MR. BLACKBURN: The Smal l Busi ness2

Advocat e had i ndi cat ed i n i t s openi ng and cl osi ng ar gument3i n t he appl i cat i on hear i ng i n J une t hat i t was not , per4

se, opposed t o t he concept of t he Mar i t i me Li nk, and t hat5

i t coul d benef i t Nova Scot i a rat epayer s over i t s expect ed6

l i f e.7

The i ssue bef or e t he Board t hen was8

whet her t he appl i cat i on st r uct ur ed met t he t erms of t he9

Mar i t i me Li nk Cost s Recover y Pr ocess Regul at i on, Sect i on10

6, and t hat i t , t he pr oj ect , r epr esent s t he l owest l ong-11

t er m cost al t er nat i ve f or el ect r i ci t y f or r at epayer s i n12

t he pr ovi nce.13

Smal l Busi ness Advocate, al ong wi t h14

t he Consumer Advocate and other i nt ervenors, t ook t he15

posi t i on t hat t he Mar i t i me Li nk, as st r uct ur ed i n t he16

appl i cat i on, di d not meet t hi s condi t i on. The Boar d i n17

par t had r ef er enced t he l ack of assurance of addi t i onal18

mar ket - pr i ce ener gy t o of f set t he cost of t he hi gher19

pr i ced cl ock energy accept ed t hi s ar gument and at20

par agr aph 457 of i t s deci si on st at ed:21

22

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"The Boar d concl udes t hat t he1

avai l abi l i t y of mar ket - pr i ce2

ener gy i s cruci al t o t he3

vi abi l i t y of t he Mar i t i me Li nk4

pr oj ect pr oposal as agai nst t he5

ot her al t er nat i ves. Mor e6

i mpor t ant l y, t he Boar d f i nds t hat7

wi t hout some enf orceabl e covenant8

about t he avai l abi l i t y of t he9

mar ket - pr i ce ener gy, t he Mar i t i me10

Li nk pr oj ect does not r epr esent11

t he l owest l ong t er m cost12

al t ernat i ve f or el ect r i ci t y13

r at epayer s i n Nova Scot i a. " ( As14

r ead)15

16

To cur e t hi s def ect and t o r equi r e17

t hat t he Mar i t i me Li nk Pr oj ect i ndeed pr ovi de t he l owest18

l ong- t er m al t er nat i ve f or r at epayer s as set out i n t he19

Regul at i ons, t he Boar d or der ed at par agr aph 459:20

21

"That NSPML obt ai n f r om Nal cor22

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Page 2614 NSUARB-ML-2013-01/M05419


t he r i ght t o access Nal cor1

mar ket - pr i ce ener gy consi st ent2

wi t h t he assumpt i ons i n t he3appl i cat i on as not ed i n NSUARB4

I R- 37 and Fi gur e 4- 4. What5

needed t o economi cal l y ser ve NSPI6

and i t s r at epayer s or t o pr ovi de7

some other ar r angement t o ensure8

access t o mar ket - pr i ce ener gy. "9

( As r ead)10

11

The sol e quest i on bef or e t he Board now12

i s whet her t he compl i ance f i l i ng of NSPML Exhi bi t M- 13413

f i l ed wi t h t he Boar d on Oct ober 21st , 2013 meet s t hi s14

cri t er i a as set out by t he Boar d. Respect f ul l y, i t i s t he15

posi t i on of t he Smal l Busi ness Advocat e t hat t he16

compl i ance f i l i ng does not meet t he r equi r ement of t he17

Boar d as set out f or t he f ol l owi ng r easons.18

One, t he amount of market - pr i ce ener gy19

as set out i n t he compl i ance f i l i ng i s si gni f i cant l y l ess20

t han set out i n t he appl i cat i on and i s not i n conf or mi t y21

wi t h t he amount of energy assumed i n I R- 37 and Fi gure 4- 422

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NSPI must pay wi l l f r om t i me t o t i me exceed mar ket pr i ce,1

Mass Hub, i f t her e' s any spot mar ket wi l l i ng t o pay a2

pr emi um. Thi s i s not onl y i nconsi st ent wi t h t he3assumpt i ons set out i n I R- 37 and Fi gur e 4- 4, but al so4

cal l s i nt o quest i on whet her t he Mar i t i me Li nk Pr oj ect wi l l5

act ual l y meet t hei r cr i t er i a i n t he Regul at i ons as bei ng6

t he l owest l ong- t er m cost al t er nat i ve f or el ectr i ci t y f or7

r at epayer s i n t he pr ovi nce.8

Four , t he guar ant ee of mar ket - pr i ce9

ener gy as set out i n t he compl i ance f i l i ng i s no guar ant ee10

at al l , as i t i dent i f i es Newf oundl and' s nat i ve l oad - -11

Newf oundl and and Labr ador ' s nat i ve l oad as f orgi vabl e12

event . Shoul d Newf oundl and Labr ador need t he Muskr at13

Fal l s energy f or i t s own energy needs as gr owi ng energy14

needs i n mi ni ng or other sect or gr owt h, t here may be no15

addi t i onal ener gy ot her t han bl ock ener gy avai l abl e t o16

NSPI .17

The t er m of t he EAA as set out i n t he18

compl i ance f i l i ng i s f or appr oxi mat el y 24 year s, r at her19

t han t he 35 year s as set out i n t he appl i cat i on. And as20

speci f i cal l y addr essed by t he Boar d i n par agr aph 226 of21

i t s deci si on, t he Boar d wi l l i mpose a condi t i on r el at i ve22

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t o t he avai l abi l i t y of mar ket - pr i ce ener gy over t he 35-1

year t er m.2

Si x, t he t i mi ng of t he del i ver y of3

ener gy i s excl usi ve wi t hi n Nal cor ' s cont r ol and t he EAA,4

and at Nal cor ' s di scr et i on may be del ayed f or up t o 3655

days. Thi s di f f er s si gni f i cant l y f r om t he appl i cat i on and6

model l i ng i n Fi gur e 4- 4 i n I R- 37 whi ch pr esumed a more or7

l ess st eady f l ow of energy as needed by NSPI .8

The i nt er r upt i on of f l ow of ener gy t o9

NSPI i s l i kel y t o r esul t i n hi gher cost t o NSPI and i t s10

r atepayers whi ch cost s may or may not be recover abl e f r om11

NSPML or Nal cor , dependi ng on t he ci r cumst ances and12

compl exi t y of pr ovi di ng pr oof of such addi t i onal cost s.13

Seven, t he bal anci ng opt i on i f t her e14

i s a var i ance as set out i n t he EAA pr esent s a uni que15

si t uat i on t hat posi t s t he possi bi l i t y t hat Emer a may be16

al l owed t o compet e wi t h NSPI and i ndependent wi nd energy17

pr oducer s i n pr ovi di ng wi nd ener gy t o make up i t s shar e of18

any var i ance i n del i ver y of t he aver age 1. 2 t er awat t hour s19

per year under t he compl i ance f i l i ng.20

Thi s cer t ai nl y was not cont empl at ed i n21

t he appl i cat i on or t he hear i ng of t he appl i cat i on and i s22

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i nconsi st ent wi t h t he concept of ensur i ng t hat Nal cor1

provi ded a mi ni mum amount of energy over t he ML t o2

compensat e f or NSPI ' s r at epayer s’ f i nanci al commi t ment , at3t he same t i me pr ovi di ng t he l owest l ong- t er m cost4

al t er nat i ve t o Nova Scot i a r at epayer s.5

For al l of t he above r easons whi ch6

wi l l be f ur t her f l eshed out and debat ed at t he compl i ance7

f i l i ng hear i ng, t he Smal l Busi ness Advocat e r egr et f ul l y8

cannot suppor t t he compl i ance f i l i ng as meet i ng t he9

r equi r ement s of t he Board' s deci si on as r ef er enced above10

or of bei ng i n t he best i nt er est s of Nova Scot i a11

r at epayer s. I t i s submi t t ed t hat t he compl i ance f i l i ng12

and Ener gy Access Agr eement i s i n f act more onerous and13

l ess t han t he r at epayer s’ i nt er est i n t he t er ms set out i n14

t he NSPML' s appl i cat i on. They do not hi ng t o bal ance or15

al l evi at e t he r i sks t o Nova Scot i a r at epayer s t hat was16

appar ent and addr essed i n t he hear i ng of t he appl i cat i on17

and t he Boar d' s deci si on, al l of whi ch we r espect f ul l y18

submi t .19

Thank you.20


Mr . Smel l i e?22

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MR. SMELLIE: Thank you, Mr . Chai r man.1

Seat ed bef or e you i s t he wi t ness panel2

f or t he Appl i cant s t oday. Cl osest t o you, Mr . Wayne3

O' Connor , Mr . Mark Si debot t om, Ms. Nancy Tower , and4

Mr . Ri ck J anega.5

As t hi s i s a cont i nuat i on, si r , of t he6

or i gi nal pr oceedi ng, I t ake i t t hat Mr . Si debot t om and7

Mr . J anega and Ms. Tower needn' t be r eaf f i r med, but8

perhaps Mr . O' Connor coul d be af f i r med.9

THE CHAIR: Yeah, act ual l y I t hought10

I ' d swear ever ybody i n al l over agai n - - -11

MR. SMELLIE: That ' s f i ne.12

THE CHAIR: - - - i f t hat ' s al l r i ght .13

J ust - - i t ' s been a whi l e, and t here14

ar e some new pl ayer s, so i f t hat ' s okay wi t h you f ol ks.15

MR. SMELLIE: Pl ease.16

17

18

19

20

21

22

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t hat i t i s not t o r e- l i t i gat e t he Boar d' s ear l i er1

deci si on.2

THE CHAIR: I agr ee, and I t hought t he3

Boar d made that cl ear i n t he l et t er conveni ng t he hear i ng.4

MR. OUTHOUSE: I j ust want ed t o5

emphasi ze t hat poi nt .6

THE CHAIR: Okay. Wel l , i f I st r ayed7

f r om t hat scr i pt I di dn' t know t hat I di d t hat .8

MR. DEVEAU: So j ust i n r el at i on t o9

t hat , Mr . Smel l i e i ndi cat ed t hat t hi s was a cont i nuat i on.10

So that ' s t he wor di ng t hat you want t o caut i on us on?11

MR. OUTHOUSE: I hear d hi m say t hat .12

I r egar d t hi s as a separ at e pr oceedi ng i n t he sense that13

i t i s t o det er mi ne a new i ssue t hat i s bef or e t he Boar d14

whet her t hose condi t i ons have been sat i sf i ed. That15

doesn' t mean t hat t he exhi bi t s and al l t hat ar e bef or e t he16

Boar d, but i t i s, i n my vi ew, a speci al pur pose hear i ng t o17

deter mi ne whet her t hose condi t i ons have been sat i sf i ed.18

MR. SMELLIE: That ' s f i ne, Mr . Chai r .19

I t ake i t you don' t need me to rei nt r oduce t o you and your20

col l eague Mr . J anega and Ms. Tower and Mr . Si debot t om?21

THE CHAIR: No, no.22

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MR. SMELLIE: That ' s f i ne.1

THE CHAIR: And t hey j ust need t o2

adopt t he evi dence t hat ' s been f i l ed i n connect i on wi t h3t hi s pr oceedi ng.4

MR. SMELLIE: Al l r i ght .5

Wel l , l et me do t hat f i r st of al l ,6

Mr . Chai r .7

DIRECT EXAMINATION BY MR. SMELLIE8

MR. SMELLIE: St ar t i ng wi t h you,9

Mr . J anega, and wor ki ng t o your r i ght . Do each of you10

adopt as your evi dence i n thi s proceedi ng t he compl i ance11

f i l i ng Ener gy Access Agr eement t hat has been f i l ed wi t h12

t hat compl i ance f i l i ng i n r esponse t o t he Boar d' s13

condi t i ons i mposed i n i t s J ul y 22nd deci si on?14

MR. JANEGA: Yes, I do.15

MS. TOWER: Yes, I do.16

MR. SIDEBOTTOM: Yes, I do.17

MR. O'CONNOR: Yes, I do.18

MR. SMELLIE: Mr . Chai r , t he panel ' s19

col l ect i ve r esponsi bi l i t y i s obvi ousl y t o addr ess that20

compl i ance f i l i ng, and bear i ng i n mi nd t he pur pose of t hi s21

pr oceedi ng I can t el l you t hat each member of t he panel22

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was i nvol ved t o a gr eat er or l esser degr ee i n t he1

negot i at i ons l eadi ng t o t he Energy Access Agr eement and so2

t hey ar e abl e t o addr ess t he mar ket - pr i ced ener gy3

condi t i on and t hat agr eement .4

Let me i nt r oduce t o you Mr . O' Connor5

mor e f or mal l y.6

He i s t he Execut i ve Vi ce- Pr esi dent of7

Oper at i ons f or Nova Scot i a Power . He di d t est i f y bef or e8

t hi s Boar d l ast Febr uar y i n NSPI ' s 2013 ACE Appl i cat i on.9

And Mr . O' Connor , l et me ask you i f10

you woul d qui ckl y r emi nd t he Boar d of your qual i f i cat i ons,11

exper i ence, and cur r ent dut i es wi t h NSPI .12

MR. O'CONNOR: Thank you.13

I j oi ned Nova Scot i a Power i n Oct ober14

of 2012, and i n my cur r ent r ol e I am r esponsi bl e f or power15

gener at i on, f uel pr ocur ement and I T syst ems. Bef or e16

j oi ni ng Nova Scot i a Power , I was t he Pr esi dent and Chi ef17

Oper at i ng Of f i cer of Emer a Ener gy, an af f i l i at e of NSP,18

and was at Emera Ener gy f or over ni ne years.19

Pr i or t o j oi ni ng Emer a, I spent 1320

year s wi t h Tr ansCanada Pi pel i nes i n var i ous r ol es i n t hei r21

power and nat ur al gas, mar ket i ng, and t r adi ng busi nesses.22

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Over my 25 year s i n t he energy1

busi ness I have gat her ed extensi ve exper i ence i n t he2

buyi ng, sel l i ng, and hedgi ng of physi cal and f i nanci al3ener gy pr oduct s mai nl y r el at i ng t o nat ur al gas and4

el ect r i ci t y.5

I have extensi ve exper i ence i n t he6

ener gy mar ket s of East ern Canada, t he Mar i t i mes, t he U. S.7

Nor t heast , i ncl udi ng New Yor k, and have a deep worki ng8

knowl edge of t he el ect r i ci t y and nat ur al gas9

i nf r ast r uct ur e i n t hese mar ket s.10

I have a busi ness degr ee f r om t he11

Uni ver si t y of Let hbr i dge i n Al ber t a.12


MR. SMELLIE: Thank you, Mr . O' Connor .14

Ther e i s one cor r ect i on, Mr . Chai r man,15

t o t he compl i ance f i l i ng, and per haps we coul d have16

Exhi bi t 134 up on t he scr een, page 7 of 20, and I ' m17

l ooki ng, i n par t i cul ar , at I t em 6 at t he bot t om of t hat18

page.19

The st at ement t hat i s made i n t he20

f i r st col umn shoul d r ead as f ol l ows:21

22

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"Det ai l s of t he asset demar cat i on1

f or t he t r ansf er of t he Mar i t i me2

Li nk asset s t o Nal cor and3

Woodbi ne upgrades t o NSPI at t he4

end of t he 35 year t er m of t he5

agr eement s ar e t o be suppl i ed t o6

t he UARB ( paragr aph 388) . "7

8

I s t hat t he way t hat par agr aph shoul d9

r ead, Ms. Tower?10

MS. TOWER: Yes, i t i s.11


MR. SMELLIE: And t hat ' s al l i n t hat13

r espect , Mr . Chai r man.14

We di d f i l e a panel Openi ng St atement15

yest er day, and wi t h your l eave, I woul d ask Mr . O' Connor16

t o del i ver t hat Openi ng St at ement on behal f of t he panel .17

THE CHAIR: Sur e.18

OPENING STATEMENT - NSPML19

MR. O'CONNOR: Good morni ng, Mr .20

Chai r , Members of t he Boar d, and t hank you f or t he21

oppor t uni t y t o pr ovi de t hi s Openi ng St at ement .22

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On J ul y 22nd, t he Boar d conf i r med t hat1

t he Mar i t i me Li nk i s t he l owest l ong- t er m cost opt i on t o2

meet demand i n Nova Scot i a wi t hi n envi r onment al3obl i gat i ons, as l ong as Nova Scot i a Power has access t o4

market - pr i ced ener gy. The Boar d di r ect ed t hat we obt ai n5

commerci al assurances t hat Nova Scot i a Power can access6

market - pr i ced energy. The Energy Access Agr eement t hat i s7

cont ai ned i n t he compl i ance f i l i ng achi eves t hi s8

obj ecti ve.9

I n regar d t o t he Energy Access10

Agreement and t he comment s cont ai ned i n t he i ntervenor11

evi dence, we woul d l i ke the Boar d to under st and our vi ews:12

Nal cor ’ s 60- year hi st or y of hydr ol ogy exper i ence and i t s13

gener at i ng pl anni ng cr i t er i a, as expl ai ned i n t he14

compl i ance f i l i ng and at t he t echni cal conf er ence, gi ves15

Nova Scot i a Power, Emera, and Nal cor t he conf i dence t o16

make t he cont r act ual commi t ment s cont ai ned i n t he Energy17

Access Agreement .18

Nal cor has a cont r act ual obl i gat i on t o19

f or ecast and bi d al l of i t s avai l abl e sur pl us ener gy20

t hr oughout t he t er m of t he cont r act , up t o 1. 8 t er awat t21

hour s per year , and t hi s obl i gat i on cont i nues i n each year22

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of t he agr eement , i ncl udi ng af t er Nal cor has met t he1

overal l commi t ment of an average of 1. 2 t erawat t hour s per2

year .3

The Ener gy Access Agreement provi des4

an enf or ceabl e covenant wi t h respect t o Nova Scot i a5

Power ’ s r i ght t o access mar ket - pr i ced ener gy. Commer ci al6

assur ances have been obt ai ned, as r equest ed by t he Boar d.7

Because of t he Energy Access8

Agreement , Nova Scot i a Power cust omer s have been9

guar ant eed f i r st access t o t he avai l abl e sur pl us ener gy i n10

Newf oundl and and Labr ador .11

Nova Scot i a Power cont i nues t o r et ai n12

t he necessar y f l exi bi l i t y about pr ocur ement t o be abl e to13

make deci si ons i n t he best i nt er est s of cust omer s, and14

t hese deci si ons wi l l r emai n subj ect t o t he Boar d’ s15

pr udence r equi r ement s under t he Fuel Adj ust ment Mechani sm.16

Nova Scot i a Power ’ s annual and addi t i onal compet i t i ve17

sol i ci t at i ons wi l l ensur e val ue can be obt ai ned f or18

cust omer s.19

Gr een ener gy pr i ci ng i s not appl i cabl e20

t o t he economy ener gy pr oduct t hat i s t he subj ect of t he21

Ener gy Access Agr eement . Thi s ener gy wi l l be avai l abl e at22

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t he mar ket pr i ce t hat i s appl i cabl e t o economy ener gy at1

t he t i me of any t r ansact i on, and Nova Scot i a Power wi l l2

have f ul l audi t r i ght s t o pr ot ect t he i nt er est s of3cust omer s.4

We have not at t empt ed, i n t hi s Openi ng5

St at ement , t o addr ess ever y i t em r ai sed by i nt er venor6

evi dence. We l ook f or war d t o t he oppor t uni t y t o addr ess7

any quest i ons t he Boar d or i nt ervenors may have about t he8

Ener gy Access Agr eement and t he compl i ance f i l i ng.9

The Ener gy Access Agreement and t he10

Mar i t i me Li nk ar e i n t he best i nt er est s of t he cust omer s11

of Nova Scot i a Power . We not e t hat Boar d counsel12

consul t ant , Mor r i son Par k, agr ees t hat we have achi eved13

compl i ance wi t h t he Boar d’ s condi t i on.14

Thank you.15


MR. SMELLIE: That ' s al l I have,17

Mr . Chai r . The panel i s avai l abl e f or cr oss- exami nat i on.18

THE CHAIR: Mr . Mer r i ck, we’ r e j ust19

goi ng t o t ake a mi nut e to l et t he camer as l eave.20

(SHORT PAUSE) 21

THE CHAIR: Whenever you' r e ready.22

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MR. MERRICK: Thank you, Mr . Chai r man.1

CROSS-EXAMINATION BY MR. MERRICK2

MR. MERRICK: Good morni ng, panel .3

Let me f i r st deal wi t h the agr eement ,4

t he EAA, and j ust what i t guarant ees as a basi c mi ni mum.5

I f you can t ur n t o Exhi bi t 134, whi ch6

i s t he appl i cat i on, and at t ached t o t hat , I under st and, i s7

t he EAA. And i f you can t ur n t o Cl ause 6 at t he bot t om of8

page 7.9

And I see ther e 6( a) , whi ch says t hat :10

11

"Subj ect t o Sect i on 7( e) ( i ) and12

t o f or ce maj eur e event s, Nal cor13

shal l make avai l abl e t o NSPI an14

aver age of at l east 1. 2 TWh of15

Ener gy per Cont r act Year . "16

17

And I ' m assumi ng t hat t hat ' s t he18

cl ause t hat set s out at l east a guar ant ee of t he 1. 2. Am19

I cor r ect on t hat ?20

And Mr . J anega, I ' l l l ook t o you, but21

I ' l l l eave i t t o whoever want s t o answer .22

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MS. TOWER: So yes, t hat i s t he1

commi t ment , t o make avai l abl e t he 1. 2 on aver age per2

cont r act year .3 MR. MERRICK: Her e' s my pr obl em. I f I4

go back t o 4( e) , and t hat ' s on page 6, I bel i eve, same5

page, i t says t hat :6

7

"Nal cor ' s r equi r ement s t o bi d t he8

Nal cor For ecast or schedul e9

del i ver y of t he10

Nal cor . . . Ener gy. . . [ et cet er a, et11

cet er a, subj ect t o] t he12

f ol l owi ng: ( i ) Nal cor r equi r es13

such Ener gy to meet NL Nat i ve14

Load. . . "15

16

Does t hat over r i de 6( a) ?17

MS. TOWER: So maybe i t woul d be18

hel pf ul i f I j ust t al k a bi t about how i t wor ks at a hi gh19

l evel .20

So ul t i matel y, what t he agr eement21

guar ant ees i s t hat Nova Scot i a Power wi l l r ecei ve, on22

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aver age, 1. 2 t er awat t hour s of ener gy annual l y bi d i n t o1

sol i ci t at i ons on aver age on an annual basi s.2

So what Nal cor i s r equi r ed t o do i s3

bi d i n t he amount of ener gy that t hey have af t er t hey' ve4

sat i sf i ed - - t hey' ve l ooked at t hei r hydr ol ogy, t hei r5

hydr ol ogy f or ecast s, and sat i sf i ed nat i ve l oad.6

And so t he maxi mum amount up t o 1. 87

t er awat t hour s t hat comes f r om t hat cal cul at i on get s8

of f er ed t o Nova Scot i a Power or get s put t o Nova Scot i a9

Power i n a f or ecast .10

Ul t i mat el y, at t he end of - - at t he11

end of everyt hi ng, Nal cor and Emera have st epped up t o12

backst op that commi t ment t o ensure t hat t her e wi l l be 1. 213

t erawat t hour s, on aver age, of f er ed t o Nova Scot i a Power .14

MR. MERRICK: Al l r i ght . But my15

pr obl em i s t hi s. When you l ook at t hose t wo cl auses,16

assume f or t he moment t hat i n a par t i cul ar year , or17

per haps over t he whol e t er m of t he cont r act , nat i ve l oad18

pr e- empt s or i s - - nat i ve l oad r equi r es t he excess or19

surpl us ener gy that Nal cor has, t hat ext r a 40 per cent20

sur pl us.21

Assume f or t he moment t hat nat i ve l oad22

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t akes i t al l up. Does t hat cl ause over r i de 6( a) ? I n1

ot her words, i s even t he 1. 2 not a guar ant eed mi ni mum?2

MR. SIDEBOTTOM: So nat i ve l oad and3t he hydr ol ogy ar e not f or gi vabl e event s when i t comes t o4

t he 1. 2 aver age t hr ough t i me.5

MR. MERRICK: Wher e does i t say that?6

MR. SIDEBOTTOM: Under 6( a) , i t ' s onl y7

subj ect t o 7( e) ( i ) and f or ce maj eur e i s t he commi t ment8

excusabl e, so i t ' s not hydr ol ogy and l oad- r el at ed over t he9

aver age of t he t er m.10

MR. MERRICK: My pr obl em i s, I can11

under st and somebody per haps advanci ng t hat as an12

i nt er pr et at i on, but I don' t see i t expr essl y set out i n13

t he cont ract i t sel f .14

Ther e doesn' t seem, t o me, t o be15

anyt hi ng t o l i mi t 4( e) .16

MS. TOWER: I t i s t he agr eement of t he17

par t i es. I t i s t he under st andi ng of t he par t i es t hat18

t hat ' s how i t wor ks, t hat t he 1. 2 i s not - - t he 1. 2 on19

average commi t ment i s not f orgi vabl e by hydr ol ogy or20

nat i ve l oad.21

MR. MERRICK: So t hat your22

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under st andi ng i s t hat when you r ead al l t he cl auses1

t oget her , nat i ve l oad may, i n f act , r educe t he obl i gat i on2

t o bi d - - t o f or ecast or t o bi d ener gy down to a maxi mum3

or a mi ni mum, an amount of 1. 2, and that t hat you cannot4

encroach on f or nat i ve l oad. I s t hat cor r ect ?5

MR. O'CONNOR: No, t hat ' s not cor r ect .6

I bel i eve i f we l ook at t hat sect i on, whi ch i s f or gi vabl e7

event s, so Nal cor ' s r equi r ement t o bi d t he f or ecast or8

schedul e del i ver y i s t hen subj ect t o t hose i t ems t her e.9

I t does not i n any way al l evi at e t hem10

of t he obl i gat i on over t he t er m t o meet at l east t he 1. 211

t er awat t hour s.12

MR. MERRICK: Al l r i ght .13

MR. O'CONNOR: So t he f or ecast i t sel f14

coul d dr op bel ow i t , but t hei r over al l obl i gat i on f or t he15

ent i r e t er m i s not af f ected by t hat .16

MR. MERRICK: At t he end of t he 2417

year s, t hey must have pr ovi ded t he 1. 2 aver age, so t hat i s18

our sol i d mi ni mum guar ant eed amount . I s t hat cor r ect ?19

MS. TOWER: That i s cor r ect .20


MR. JANEGA: I t hi nk t her e' s - - t he22

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7( e) ( i ) , how t hat pl ays i nt o t hat st at ement .1

MS. TOWER: So t o t he extent t hat2

Nal cor f or ecast s f or some r eason t hat t hey wi l l not be3

abl e to meet t he commi t ment of t he 1. 2, t hen 7( e) ( i ) i s4

t he - - i s where Nal cor and Emera st ep up behi nd t hat5

commi t ment t o assure t hat t he commi t ment i s met .6

So Emer a st eps up f or t he 300 GWh and7

Nal cor f or t he 900.8


MS. TOWER: So i t ' s a backst op agai nst10

t he Nal cor i ni t i al commi t ment .11

MR. MERRICK: Al l r i ght . But we ar e12

r eadi ng i t cor r ect l y when we see t hat i f nat i ve l oad13

r equi r es i t , Nal cor does not have t o ei t her f or ecast or14

bi d any mi ni mum amount down t o t hat - - mai nt ai ni ng the15

aver age of 1. 2.16

MR. SIDEBOTTOM: That i s onl y i n a17

par t i cul ar year , but t he commi t ment t o t he amount of18

ener gy t hr ough t he t er m st i l l st ands at an aver age of 1. 2.19

MR. MERRICK: Al l r i ght . I s my20

cal cul at i on cor r ect when I go t o l ook at what t he or i gi nal21

quant i t y of ener gy was t hat was bei ng consi dered i n the22

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equi val ent amount of energy thr ough t he Nal cor path, whi ch1

was t he poi nt of most concern, t hat matched t he l ow- l oad2

condi t i ons, and t hat ’ s appr oxi mat el y t he 1. 2 t er awat t s3

t hr ough t i me i n t hat par t i cul ar case.4

MR. MERRICK: Al l r i ght . But my5

quest i on was si mpl y t hat at t he t i me of t he appl i cat i on,6

t he assumpt i on was t hat t he amount of energy t hat woul d be7

made avai l abl e was t he 51. 4 t er awat t hour s? I ’ m usi ng8

your 51 t hat you sai d you cal cul at ed.9

MR. SIDEBOTTOM: So I t hi nk we’ r e10

t al ki ng about t wo scenar i os, t he base- l oad scenar i o and11

t he l ow- l oad scenar i o, and - - -12

MR. MERRICK: No. My quest i on was13

t hi s: At t he t i me of t he appl i cat i on, t he vol umes t hat14

you put f or war d as bei ng avai l abl e f r om Nal cor was a t ot al15

of t he 51 poi nt what ever ?16

MR. SIDEBOTTOM: No. No, t hat woul d17

be made avai l abl e f r om t he mar ket unt i l - - r emember , once18

t he Mar i t i me Li nk i s bui l t , you’ ve got t wo access poi nt s19

t o t he market ; one t hrough Nal cor and a second one t hrough20

t he mar ket i n New Br unswi ck, and t hat i s t he tot al of t he21

t wo mar ket access poi nt s t hat i s t he 51.22

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MR. MERRICK: But t aki ng i nt o account1

you t est i f i ed t o access vol umes, t he amount of access t hat2

you were sayi ng t he Fi gur e 4. 4 was based on, was t hat not3t he 51. 4 t er awat t hour s?4

MR. SIDEBOTTOM: I n t he base- l oad5

case, yes; i t was 51 gi gawat t s of t ot al ener gy access6

t hr ough t he access poi nt s, yes.7

MR. DEVEAU: I ’ m sor r y, you sai d8

gi gawat t s t here; you mean t erawat t s?9

MR. SIDEBOTTOM: Sor r y, t er awat t s.10

Thank you f or t he cor r ect i on.11

MR. MERRICK: And can you gi ve me i n12

t erawat t hours, t he same uni t of measur ement , t he amount13

t hat you say t hi s agr eement pr ovi des f or ?14

MR. SIDEBOTTOM: Thi s agr eement15

pr ovi des access t o 28 t er awat t hour s f r om Newf oundl and, as16

a mi ni mum. I n f act , t he commi t ment i s t o t he 1. 2, but i n17

f act , even when t hat i s sat i sf i ed, t her e’ s st i l l f ur t her18

commi t ment s of access ener gy beyond t he 28. Because t hey19

st i l l have t o bi d i n t hei r access ener gy i f t hey do, i n20

f act , make t he 1. 2 aver age.21

MR. MERRICK: Why woul d you not use22

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t he same assumpt i ons as were used i n t he or i gi nal1

appl i cat i on, t he same assumpt i ons as t o vol ume of energy2

t hat was t o be made avai l abl e under t he EAA? Why woul dn’ t3

you negot i ate wi t h Nal cor f or vol umes under t he EAA t hat4

woul d be equi val ent t o t hose t hat you used i n your5

appl i cat i on?6

MS. TOWER: So we - - as Mr . Si debot t om7

sai d, when we recei ved t he deci si on and had t he benef i t of8

r eadi ng t he deci si on i n i t s ent i r et y al ong wi t h t he9

condi t i on, we were - - we underst ood i n paragr aph 106 of10

t he Boar d’ s deci si on whi ch reads t hat on bal ance the Boar d11

bel i eves t hat NSPML’ s l ow- l oad f or ecast , whi ch most12

cl osel y al i gns wi t h NSPI ’ s cur r ent l oad f or ecast , i s a13

mor e r eal i st i c scenar i o t han t he base- l oad f or ecast . And14

so t her e was l ot s of di scussi on of cour se, as you’ l l15

r emember, around t he l ow- l oad ver sus t he base- l oad, and16

i t ’ s - - cer t ai nl y we t ook t he concl usi on, t hi s concl usi on17

of t he Boar d, and r ead t hat i n conj unct i on wi t h t he18

deci si on and t he condi t i on, and det er mi ned t hat what t he19

Boar d asked us t o do was l ook at t he condi t i on i n a l ow-20

l oad scenar i o.21

MR. MERRICK: So am I under st andi ng22

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you cor r ect l y, t hat what you have pr ovi ded f or i n t he EAA1

ar e vol umes t hat ar e based sol el y on t he l ow- l oad2

scenar i o?3 MS. TOWER: At a mi ni mum. So as Mr .4

Si debot t om says, we bel i eve t here wi l l be much more energy5

t han that , but t he commi t ment i s f or t he Nal cor vol umes of6

ener gy i n t he l ow- l oad scenar i o; yes, t hat ’ s cor r ect .7

MR. MERRICK: And i f by chance i t8

t ur ns out t hat al l you can acqui r e under t he EAA i s t he9

mi ni mums you pr ovi ded f or , t hen al l you’ ve pr ovi ded f or us10

i s acqui r i ng ener gy t o ser vi ce t he l ow- l oad f or ecast or11

t he l ow- l oad scenar i o?12

MS. TOWER: And t hat ’ s what we bel i eve13

t he Boar d asked us t o do.14

MR. MERRICK: And i f somebody wer e t o15

suggest t o you t hat i t was i mport ant t o have a more robust16

t est i ng of your acqui si t i on abi l i t i es so t hat you shoul d17

al so l ook at your medi um- l oad f or ecast - - I ’ m not usi ng18

t he cor r ect t er mi nol ogy - - you haven’ t done t hat ?19

MR. JANEGA: Wel l , I t hi nk t he 1. 820

t erawat t s t hat i s embedded i n t he agr eement , as wel l as21

t he expected upper end of avai l abl e energy does addr ess22

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t hat . We know, and as Nal cor pr esent ed i n t he hear i ng,1

t her e i s i nf or mat i on suppor t i ng t he hydr ol ogy i n t hei r2

expect ed ener gy, t hat t hey do have surpl us. The 1. 2 i s3

t he mi ni mum.4

MR. MERRICK: But t her e’ s no guar ant ee5

f or t he 1. 8, i s t her e?6

MR. JANEGA: Yes, i f t hey have ener gy,7

t hey have t o bi d i t t o Nova Scot i a Power and t he8

demonst r at i on of t he hydr ol ogy i nf or mat i on - - and Mr .9

Si debot t om can speak t o i t i n det ai l - - pr ovi des t hat10

i nsi ght of what Nal cor ’ s expect ed avai l abl e ener gy i s;11

t hey have t o bi d i t .12

MR. MERRICK: Unl ess - - -13

MR. JANEGA: I t i s commi t t ed.14

MR. MERRICK: Unl ess nat i ve l oad15

r equi r es ot her wi se?16

MR. JANEGA: That , agai n, you’ r e17

aski ng i f t hat cover s t he upper end. The 1. 8 exceeds what18

was i n t he base- l oad model l i ng. I t act ual l y exceeds t hat19

vol ume. I f Nal cor has i t , t hey have t o bi d i t . Nova20

Scot i a has f i r st r i ght t o i t . I f t hey don’ t t ake i t , t hey21

st i l l have a second r i ght t o t hat ener gy by i t f l owi ng t o22

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market , second oppor t uni t y.1

MR. MERRICK: Mr . J anega, t hat t akes2

me back t o my f i r st poi nt . As I r ead t he agr eement , and I3t hought what t he panel agr eed wi t h, was t hat as f ar as a4

guar ant eed mi ni mum amount - - guarant eed, not subj ect t o5

bei ng encr oached upon by nat i ve l oad; t he guarant eed6

amount was 1. 2 t erawat t hours averaged over t he whol e7

t i me. An aver age of 1. 2 t er awat t hour s.8

MR. SIDEBOTTOM: That ’ s r i ght , and9

maybe I coul d hel p a l i t t l e bi t wi t h t hat .10

So t he r eason t hat Nal cor i s11

comf or t abl e wi t h t hat i s t hat a hydr aul i c syst em, and12

especi al l y one wher e t hey’ r e l ooki ng t o be renewabl e i nt o13

t he f ut ur e, t hey wi l l al ways have t o have suf f i ci ent14

r esour ces t o ser ve t hei r f i r m cust omer s t hr ough t i me. And15

what t hat means i s t hat t hey wi l l have a surpl us by16

desi gn, whi ch t hen al l ows us t o have conf i dence t hat t hat17

ener gy wi l l be avai l abl e i nt o t he f ut ur e.18

So t hat ’ s, i n f act , why we bel i eve19

t her e’ s as a most pr obabl e case, much more ener gy t han t he20

1. 2. I t ake your poi nt , t he absol ut e guar ant ee i s the 1. 221

and t hat i s t he commi t ment . But my expect at i on i s t her e’ s22

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a l ot more energy avai l abl e because of t he way t he1

hydr aul i c syst em wor ks, and t he way the excess ener gy i s2

cur r ent l y - - or pr edi ct ed t o be avai l abl e t hr ough t he t er m3

of t hi s agr eement .4

MR. MERRICK: I woul d have a l ot - - I5

woul d have gr eat er assur ance i f I knew t hat t hat was t he6

same expect at i on of Newf oundl and.7

Mr . Chai r man, I ’ d l i ke t o i nt r oduce an8

exhi bi t whi ch i s a copy of t he Hansar d of t he Newf oundl and9

and Labr ador Legi sl atur e. A copy has been made avai l abl e10

t o t he Boar d and i t ’ s i n el ectr oni c f or m, I t hi nk. I t ’ s11

dat ed November t he 6t h, 2013.12

THE CHAIR: That ’ l l be Exhi bi t M- 147.13

--- EXHIBIT NO. M-147: 14

Provi nce of Newf oundl and15

( Hansar d) 47t h General Assembl y16

Vol ume XLVI I Number 25 ( 2nd17

Sessi on) dat ed November 06, 201318

MR. MERRICK: Now, panel , I want t o19

t ake you t o the thi r d page, whi ch on t he bot t om i s number20

1378, and t hi s r ecor ds t he pr oceedi ngs of t he House of21

Assembl y on November t he 6t h, 2013. And i f you go up i nt o22

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t he second col umn near t he top of t he page, i t st ar t s wi t h1

t he paragr aph, “Mr . Speaker , make no mi st ake. . . ” You see2

t hat ? And i t says:34

“Mr . Speaker , make no mi st ake, we5

wi l l sel l t hat 40 per cent sur pl us6

power . ” ( As r ead)7

8

Thi s i s t he 40 per cent t hat woul d be9

made avai l abl e under t he EAA.10

11

“. . . we wi l l sel l t hat 40 per cent12

sur pl us power . As t i me goes on13

when we need that power we wi l l14

not be sel l i ng i t , we wi l l be15

usi ng i t . We have sai d t her e i s16

i ndust r i al gr owt h; t her e ar e17

gr owi ng demands of t he pr ovi nce.18

When we need t he power , Mr .19

Speaker , we wi l l have i t20

avai l abl e. ” ( As r ead)21

22

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And i f you can ski p down a coupl e of1

par agr aphs t o wher e i t ’ s Mr . Dal l ey he says:2

3

“Mr . Speaker , t hi s get s me t o4

Nova Scot i a wi t h t he Mar i t i me5

Li nk. So because of t he Mar i t i me6

Li nk and t hat 40 percent power,7

we now have a chance t o sel l t hat8

power when we do not need i t9

because we have access t o10

mar ket s. We can sel l i t i n New11

Engl and, we can sel l i t i n New12

York, we can sel l i t Ont ar i o, or13

we can sel l i t i n Nova Scot i a.14

I t does not mat t er t o us who buys15

i t . I t j ust so happens t hat Nova16

Scot i a [ Power ] want s access t o17

t hat power . ”18

19

And i n t he l ast par agr aph he says:20

21

“Mr . Speaker , how much [ we are]22

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goi ng t o have t o sel l ? Thi s i s1

wher e i t get s a l i t t l e2

compl i cat ed, and I wi l l not get3t angl ed up wi t h number s t oo much,4

but we have 40 percent of t he5

f i r m power [ t hat ’ s] goi ng t o be6

avai l abl e r i ght away. So we sel l7

i t unt i l we need i t . I want t o8

be cl ear . We have not si gned a9

cont r act t hat commi t s t he 4010

per cent of f i r m power t o Nova11

Scot i a. ”12

13

And t hen j ust i f you can f l i p t o t he14

second - - t he next page i n t he r i ght - hand - - l ef t - hand15

col umn down near t he bot t om, you’ l l see i n t he yel l ow16

wher e he goes on t o say:17

18

“We ar e onl y guarant eei ng t hat19

Nova Scot i a has access t o the20

power cr eat ed f r om. . . r ai n and21

snow, t he nonf i r m power , whi ch i s22

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an aver age of 1. 2 t er awat t1

hour s. ”2

3

And I t ake i t t hat t hat i s consi st ent4

wi t h t he pr oposi t i on t hat anyt hi ng over 1. 2 i s subj ect t o5

bei ng wi t hhel d or not bi d or not sol d or not avai l abl e i f6

nat i ve l oad r equi r es i t .7

MS. TOWER: The f i rst , I - - wi t hout8

havi ng r ead al l of i t , what he says i s cor r ect . I assume9

t hat what he’ s t al ki ng about i n t he f i r st 40 per cent , t he10

f i r m power , i s the Muskr at power . And t he 1. 2 t er awat t11

hour s i s t he f i r m t o aver age sur pl us, as Mr . Humphr i es12

t al ked about i n t he t echni cal conf er ence i n t he char t t hat13

he pr esent ed.14

And so i n t he hear i ng i n May when we15

t al ked about sur pl us ener gy, we act ual l y di dn’ t t al k about16

t hi s 1. 2 t er awat t hour s, f i r m t o aver age sur pl us. So17

t hat ’ s i n addi t i on - - what we’ r e t al ki ng about now and18

what he’ s r ef er r i ng t o i s i n addi t i on t o what we t al ked19

about at t he t i me. So we had l ot s of di scussi on about t he20

Muskr at sur pl us and t he recal l ener gy f r om t he Upper21

Churchi l l . Thi s , i n f act , i s i n addi t i on t o t hat .22

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So i t i s f or t hat r eason t hat Nal cor1

i s conf i dent t hat t hey wi l l have t he 1. 2 t er awat t hour s on2

average. And t he r eason t hat t hey have st epped up, not3onl y t o of f er i t i n t he f i r st pl ace, but t o t hen backst op4

i t wi t h Emer a i n t he second i nst ance, and so t hey ar e5

conf i dent t hey wi l l have l ot s of ener gy.6

The 1. 2 i s what t hey need - - and Mr .7

Si debot t om pr obabl y bet t er t o expl ai n, but what t hey need8

t o ensur e t hat on a ver y, ver y dr y year t hey st i l l have9

enough energy t o meet t hei r f i r m l oad. And so i n many10

ot her year s t her e wi l l be mor e t han t hat , and i n f act ,11

above t he 1. 2. And so t hat i s the cal cul at i on of t he 1. 2,12

on aver age.13

MR. MERRICK: Di d Emer a make any14

at t empt i n negot i at e a hi gher maxi mum guarant eed mi ni mum?15

I n ot her wor ds, i nst ead of 1. 2, negot i at e t o get a 1. 816

guar anteed amount ?17

MS. TOWER: What we negot i at ed and18

what we got was access t o al l of Nal cor ’ s energy on an19

annual basi s, subj ect t o hydr ol ogy and nat i ve l oad. So20

t he f act t hat t hey have t o of f er i t t o us bef or e t hey21

commi t i t t o a l ong- t er m cont r act i s r eal l y what we got .22

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And I t hi nk i f you l ook at t he 401

per cent t hat i s r ef er r ed t o i n t he Hansar d, whi ch i s t he2

Muskr at sur pl us, t he r ecal l ener gy, pl us t hi s f i r m t o3

aver age sur pl us of t he ref er ence to the rai n and snow, we4

bel i eve t her e’ l l be l ot s of ener gy avai l abl e.5

The 1. 8 - - so Nal cor ’ s conf i dence i n6

t hat l ed t hem t o of f er a maxi mum of 1. 8 or what can be7

del i ver ed at t he del i ver y poi nt . But t hat maxi mum of 1. 88

and t hen the aver age of 1. 2.9

So yes, we di d get - - we act ual l y di d10

get more than t he 1. 2.11

MR. MERRICK: Let ’ s t al k f or a moment12

about pr i ci ng. And i f I can t ake you t o Cl ause 4( c) of13

t he EAA - - and al l I am l ooki ng f or her e i s cl ar i f i cat i on14

of some of t he ter mi nol ogy t hat ’ s been used.15

I f you have i t , i f you l ook at t he16

f i r st par agr aph, second l i ne wher e i t says, “Nal cor wi l l17

consi der NSPI ’ s mar ket al t er nat i ves”; what ’ s meant by18

that?19

MR. O’CONNOR: I bel i eve i t t o be20

f ai r l y cl ear . They wi l l , i n put t i ng t hei r bi d pr i ce21

t oget her , l ook at what t he al t er nat i ves ar e. And t hen I22

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t hi nk t hey’ r e mor e speci f i cal l y def i ned cont r actual l y i n1

( i ) and ( i i ) bel ow.2

MR. MERRICK: So t he mar ket3al t er nat i ves ar e as def i ned i n t hose sub- cl auses t hat4

f ol l ow i t ?5

MR. O’CONNOR: That ’ s cor r ect . The6

pr i ci ng must conf or m t o ei t her ( i ) or ( i i ) .7

MR. MERRICK: But t hat woul dn’ t make8

sense i f you’ r e t al ki ng about NSPI ’ s mar ket al t er nat i ves.9

I n t hose two sub- cl auses you’ r e t al ki ng about mar ket s t hat10

may be avai l abl e t o Nal cor .11

MR. O’CONNOR: They are markets t hat12

ar e avai l abl e i n our r egi on, gener al l y. They’ r e not13

excl usi ve t o Nal cor or t o us.14

MR. MERRICK: Wel l , NSPI woul d be15

l ooki ng f or vendor s; Nal cor woul d be l ooki ng f or16

pur chasers. So t he mar ket al t er nat i ves, t hey woul d be17

di f f er ent , woul dn’ t t hey?18

MR. O’CONNOR: No, t hey are t he same.19

These r epr esent t he mar ket al t er nat i ves i n t he r egi on. So20

t he one under ( i ) i s New Engl and, I SO New Engl and. Mass21

Hub i s t he cl ear i ng poi nt f or t hat ent i r e mar ket , whi ch22

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general l y has a peak of around 30, 000 megawat t s or1

i nst al l ed capaci t y of 30, 000 megawat t s, so, you know, wel l2

i n excess of 10 t i mes our mar ket si ze. So t hat i s3

gener al l y t he mar ket . The ot her one r epr esent s l ar gel y4

New Yor k, or i t coul d, i n t he f ut ur e, r epr esent Ont ar i o.5

So t hose ar e t he mar ket s i n t he r egi on, both f or buyer s6

and sel l er s.7

MR. MERRICK: So when we t al k about8

Nal cor ’ s oppor t uni t i es i n t he mai n cl ause of sub- cl ause9

( c) , we’ r e t al ki ng about t he same t hi ng as ( i i ) , wher e i t10

says “any al t er nat i ve spot - mar ket oppor t uni t i es”; you’ d be11

r ef er r i ng - - t he cont r act ’ s r ef er r i ng t o t he same12

oppor t uni t i es, I t ake i t ?13

MR. O’CONNOR: Yes.14

MR. MERRICK: I t says i n Cl ause ( i i ) :15

16

“Any al t er nat i ve spot - mar ket17

oppor t uni t i es i dent i f i abl e by18

Nal cor at t he t i me of i t s bi d19

whi ch ar e avai l abl e t o Nal cor at20

any t i me wi t hi n one year . . . ”21

22

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And j ust hel p me underst and how t hat1

woul d wor k. Because as I r ead t he pr ovi si ons deal i ng wi t h2

t he sol i ci t at i on and t he bi d mechani sms, i t ’ s cont empl at ed3t hat t her e may be a sol i ci t at i on f or suppl y over t he4

comi ng year , a year i n advance.5

MR. O’CONNOR: That ’ s cor r ect . Yeah,6

t he sol i ci t at i on i s det ai l ed her e but i t ’ s f or t he7

cont r act year whi ch commences September 1st .8

MR. MERRICK: So i f Nal cor i s l ooki ng9

t o i ncr ease t he pr i ce t hat i t can r ecover by poi nt i ng t o10

an al t er nat i ve wi t h - - any t i me wi t hi n one year f ol l owi ng11

t he Nal cor bi d, you’ r e l ooki ng at an al t er nat i ve t hat12

exi st s at t hat poi nt i n t i me f or a year i n advance; am I13

r i ght on t hat ?14

MR. O’CONNOR: That ’ s corr ect . I ’ m15

not sur e i f I agr ee wi t h t he i ncr easi ng t he pr i ce. What16

t hey have t o show i s t hat t her e i s a - - and i t ’ s17

i mpor t ant , t he wor ds ar e i mpor t ant ; t o the extent Nal cor18

can demonst r at e bot h t he l i qui d t r adi ng node wi t h19

associ at ed publ i shed f or war d pr i ci ng i n an act ual20

t r ansmi ssi on pat h.21

So i t i s t r ue, i t coul d be f or t hat22

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year , Sept ember t hr ough August , anyt i me i n that year , but1

i t has t o conf or m t o t he r est of t hat par agr aph.2

MR. MERRICK: But , f or exampl e, i f3

Nal cor wer e bi ddi ng, i t woul d have t o be awar e of t he4

al t er nat i ve at t he t i me i t bi ds; am I cor r ect on t hat ?5

MR. O’CONNOR: That ’ s absol ut el y6

cor r ect, yes.7

MR. MERRICK: Al l r i ght . So t hat any8

opport uni t y t hat mi ght become apparent t o i t a mont h or9

t wo down t he r oad woul dn’ t be - - woul dn’ t qual i f y?10

MR. O’CONNOR: That ’ s r i ght . At t he11

t i me t hey submi t t he bi d, t hey have t o, at t hat t i me,12

i dent i f y i f condi t i on ( i i ) wi l l be some of t he pr i ci ng,13

some of t he ener gy wi l l be pr i ced under t hat .14

MR. MERRICK: But Nal cor woul d not15

have t o act ual l y bi d t o sel l t hat ener gy. They woul dn’ t16

have t o act ual l y ent er i nt o a t r ansact i on. Al l t hey’ d17

have t o do i s say, “Look, we l ook at t hi s as bei ng a18

possi bl e mar ket hub. We l ook at pr i ces t hat ar e bei ng19

post ed or appl i cabl e t oday f or a year i n advance. That ’ s20

our opport uni t y. We don’ t have t o do anyt hi ng more t han21

poi nt t o t hat ”?22

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MR. O’CONNOR: So what t hey need t o do1

i s say, “Her e i s a mar ket t hat ’ s ver i f i abl e, i t ’ s l i qui d.2

There ar e buyer s and sel l er s t here. ” They don’ t have t o3act ual l y have a cont r act wi t h a buyer t her e, t hey j ust4

have to be abl e t o demonst r at e t hat we coul d move our5

ener gy t o t hat mar ket and sel l and achi eve t hat pr i ce.6

MR. MERRICK: So - - -7

MR. O’CONNOR: They do not have t o8

have a buyer f or t he ener gy. But t hi s mar ket , we wi l l be9

abl e t o ver i f y t hat t hat ’ s t he mar ket pr i ce f or t hat10

per i od. We’ l l be abl e t o ver i f y t hat t hey can get t hat11

amount of ener gy t her e. So we wi l l know t hat i t i s an12

al t er nat i ve t hat t hey can access.13

MR. MERRICK: And am I cor r ect i n14

assumi ng t hat t hi s i s brown ener gy pr i ci ng t hat we’ r e15

t al ki ng about ?16

MR. O’CONNOR: So al l of t he ener gy i n17

t he Energy Access Agr eement i s non- f i r m. I t comes wi t h no18

ot her at t r i but es. So no r enewabl e credi t s, no ot her - -19

I ’ m not sur e what br own ener gy i s. I t ’ s not a t er m t hat I20

woul d def i ne but i t i s non- f i r m ener gy t hat comes wi t h no21

r enewabl e consi der at i ons.22

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MR. MERRICK: Wel l , i f you don’ t know1

what br own ener gy i s, I don’ t .2

MR. O’CONNOR: I t ’ s not a t erm t hat ’ s3

i n t he cont r act . I t ’ s not a def i ned t er m.4

MR. MERRICK: And I assume, t hough,5

t hat t he assumpt i ons t hat were bei ng put bef ore t he Boar d6

at t he t i me of t he hear i ng i n the summer , t hose7

assumpt i ons were based on br own energy pr i ci ng as wel l , t o8

t he ext ent t hat t hat t er m appl i es?9

MR. SIDEBOTTOM : Yes, t hat ' s cor r ect .10

MR. MERRICK: Al l r i ght . J ust gi ve me11

a second.12

(SHORT PAUSE) 13

MR. MERRICK: So al l t hat Nal cor has14

t o do i n or der t o ask f or a pr i ce hi gher t han Mass Hub i s15

poi nt t o anot her mar ket node or t r adi ng poi nt and say,16

"Here' s what we coul d have got t en or can get f or our17

ener gy today or a year f r om now”; t hat ' s al l t hey' ve got18

t o do?19

MR. O'CONNOR : I thi nk that ' s a l ot ,20

qui t e f r ankl y. I t hi nk t hey have t o - - t hey have t o21

demonst r at e t hat t her e i s a l i qui d t r adi ng wi t h f or war d22

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pr i ci ng t hat t hey have an act ual t r ansmi ssi on pat h t o get1

t o t hat mar ket .2

So I t hi nk i t ' s mor e t han what you3char acter i zed. I do t hi nk t her e ar e f ai r l y st r i ngent4

condi t i ons set upon t hem, of whi ch of cour se we' l l be abl e5

t o ver i f y. So I t hi nk i t ' s mor e t han as you char act er i zed6

i t .7

MR. MERRICK: Let me t ake you t o8

anot her pr ovi si on t hat I j ust need some hel p i n9

under st andi ng, and t hat ' s t he r edel i ver y cl ause i n 4( d) ,10

whi ch i s on t hat same page. And can you expl ai n t o me11

what t he rat i onal e or t he necessi t y f or t hat one year12

i nt er r upt i bi l i t y pr ovi si on i s? Why i s t hat i n t her e?13

MR. SIDEBOTTOM: I f t her e' s a mar ket14

oppor t uni t y dur i ng t he per i od, Nal cor has t he r i ght t o15

r edi r ect t hat ener gy i nt o an al t er nat e mar ket . Now, whi l e16

exer ci si ng t hat r i ght , t hey do have t o keep Nova Scot i a17

Power whol e t hr ough an equi val ent val ue pr oposi t i on. So18

t hey have t hat oppor t uni t y to get i nt o t hat mar ket , but19

Nova Scot i a Power and i t s cust omer s ar e l ef t whol e wi t h20

t hat part i cul ar r i ght .21

MR. O'CONNOR : And, sor r y, i f I j ust22

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MR. SIDEBOTTOM : We wi l l si mpl y ensur e1

t hat t he ener gy t hat ' s r edel i ver ed has equi val ent val ue as2

act ual l y set out i n page 6 of t he agr eement . The ener gy3has t he equi val ent economi c val ue to Nova Scot i a Power.4

That i s how we keep t hem whol e.5

MR. MERRICK: And j ust goi ng wi t h t hat6

f or a moment , i s t hat si mpl y a case of compar i ng t he7

pr i ce?8

MR. SIDEBOTTOM : I t ' s a combi nat i on of9

pr i ce and any ot her cost s i ncur r ed associ at ed wi t h10

r edi r ect i ng t hat ener gy, whi ch i s qui t e a t ypi cal nor mal11

cal cul at i on we woul d car r y out i n t he cour se of our12

busi ness . We have i nter r upt i ons i n power on economy13

ener gy. We do t hose cal cul at i ons t oday.14

MR. MERRICK: Al l r i ght . But i f you15

i ncur cost s because of an i nt er r upt i on, Nal cor i nt er r upt s16

your suppl y. And I t ake i t t hey can i nt er r upt wi t h no17

mi ni mum not i ce per i od gi ven?18

MR. SIDEBOTTOM : That ' s not cor r ect.19

There i s a prot ocol where t he ener gy get s f i nal l y20

schedul ed, whi ch i s set out i n t he agr eement . Once t hat21

ener gy i s schedul ed, t hi s r i ght t o r edi r ect i s l ost and22

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i t ' s onl y at f or ce maj eur e at t hat poi nt .1

So i t ' s bet ween t he per i od of2

commi t t i ng t o the Boar d of t he RFP t o a poi nt pr i or t o3

schedul i ng t he del i ver y of t he ener gy.4

MR. MERRICK: And j ust f or my5

r ef er ence, wher e do I f i nd t hat i n the agr eement ?6

MR. O'CONNOR : That ’ s 3( c) .7

MR. MERRICK: And am I cor r ect that8

t hat ' s a day- ahead not i ce t hat woul d be i nvol ved?9

MR. SIDEBOTTOM : That ' s cor r ect .10

MR. MERRICK: Al l r i ght . But you say11

t hat you woul d make t he cust omers whol e by doi ng - - maki ng12

sur e t hat t he energy was equi val ent economi c val ue.13

So I ' m t aki ng - - I ' m assumi ng what you14

mean by t hat i s when i t comes t i me that Nal cor i s now15

pr epar ed, possi bl y a year l at er , t o del i ver ener gy that16

Nova Scot i a Power had asked f or , t hat at t hat t i me you' d17

merel y do a pr i ce - - one of t he t hi ngs you' d do t o keep18

t he cust omer whol e i s do a pr i ce compar i son.19

And l et ' s assume t hat t he energy bei ng20

del i ver ed a year l at er i s wor t h a l ot l ess t han i t was at21

t he t i me i t was or i gi nal l y commi t t ed. How woul d you do22

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t he - - how woul d you hol d t he cust omers whol e?1

MR. SIDEBOTTOM : I t woul d be at a2

t i me, pr i ce, and quant i t y such t hat t he equi val ent val ue3was r eal i zed f or cust omer s. And i t wor ks as si mpl y as4

t hat . So t he quant i t y i s not speci f i ed, but t he val ue5

pr oposi t i on i s. And keepi ng cust omer s whol e i s t he i nt ent6

t her e.7

MR. MERRICK: What i f Nova Scot i a8

Power di dn' t need i t at t hat t i me?9

MR. SIDEBOTTOM : I r eal l y can' t10

envi si on some poi nt i n one year f i ndi ng t he equi val ent11

economi c val ue. That ' s - - t hat doesn' t seem l i ke anyt hi ng12

l i kel y t hat I can t hi nk of .13

MR. MERRICK: I n any event , I assume14

t hat i f you decl i ned t he del i ver y of t he i nt er r upt ed15

ener gy t hat woul d be a cr edi t of f of Nal cor ' s obl i gat i on16

t o suppl y a cer t ai n quant i t y?17

MR. SIDEBOTTOM : I don' t know why we18

woul d decl i ne t he ener gy. I can' t t hi nk of a si t uat i on19

wher e we woul dn' t want t o cr eat e t he equi val ent economi c20

val ue. That ' s j ust si mpl y what we woul d do. And so I21

can' t even underst and how t hat woul d happen. But assumi ng22

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i t di d, whi ch i t woul d count t owar ds t he obl i gat i on, yes.1

MR. MERRICK: I ' m j ust t ryi ng t o t hi nk2

here. Assume t hen t hat - - l et me back up. You say t hat3

of cour se havi ng suppl y i nt er r upt ed and t hen r eschedul ed4

somewhere wi t hi n a year down t he road has cost s t o i t .5

MR. SIDEBOTTOM : And - - yes. And t hat6

i s why we put t hat par t i cul ar sent ence i n Cl ause (d) .7

MR. MERRICK: Al l ri ght . And what8

sor t of cost s woul d t her e be?9

MR. SIDEBOTTOM : There may be t he cost10

of r epl acement energy and any associ ated val ue wi t h r e-11

di spat chi ng t he f l eet at t he t i me. And because t hi s i s12

act ual l y set out as a br oad st at ement of val ue, i t woul d13

be what ever ef f ect i vel y was t he cost at t hat poi nt i n t i me14

due t o t he energy bei ng moved away f r om Nova Scot i a at15

t hat poi nt i n t i me.16

MR. MERRICK: So how woul d t he17

cust omers be made whol e f or t hose addi t i onal cost s?18

MR. SIDEBOTTOM : Agai n, we woul d19

f oresee t hat t hey be an ener gy wi t h a cer t ai n quant i t y and20

pr i ce t hat i t woul d of f set ot her gener at i on t hat Nova21

Scot i a Power woul d ot herwi se f or esee. We can easi l y22

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MR. SIDEBOTTOM : Yeah. Thank you, Mr .1

Chai r . I t coul d qui t e easi l y be a di f f er ent quant i t y of2

ener gy, and i t coul d be at a di f f er ent pr i ce. And we' l l3

be abl e to cal cul at e the val ue at t hat t i me based on what4

we ot her wi se woul d have done i f t hat energy woul d not have5

been t her e. And so we' l l cal cul at e bot h t he cost of t he6

energy bei ng removed at t he t i me of r emoval and we' l l7

cal cul at e the benef i t of t he ener gy wi t h a new pr i ce and8

vol ume. And t hey do not have t o be t he same vol ume.9

THE CHAIR: So say t hat t he10

i nterr upt i on comes i n Febr uary at a t i me when your11

mar gi nal cost of gener at i on i s, l et ' s say, $12 and t hey12

come t o you i n J ul y and say, "We' l l gi ve i t back to you13

when your mar gi nal cost i s at $8" ; how do you f i x t hat14

t r ansact i on?15

MR. SIDEBOTTOM: So what we' d have t o16

do i s we' d have to take more energy or at a l ower pr i ce t o17

ensur e t hat t hat be t he case. The - - -18

THE CHAIR: So t hey coul d i nt er r upt ,19

say, 10 hour s of ener gy i n Febr uar y and r edel i ver 15 i n20

t he summer? I s t hat what you' r e sayi ng?21

MR. SIDEBOTTOM: Absol ut el y, yes.22

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THE CHAIR: I see.1

MR. MERRICK: And t hat woul d assume2

you woul d need or r equi r e or be abl e t o use t hat energy i n3t he summer .4

MR. SIDEBOTTOM: Yes. And as I sai d,5

we can - - we cal cul at e t he cost of gener at i on ever y hour6

of every day, and so we can do that .7

MR. O'CONNOR: And I t hi nk t he - - i f8

t he ener gy' s comi ng back i n a t i me of t he year wher e i t ' s9

of l ower val ue, i t wi l l have l ower economi c val ue so we10

woul d need t o have mor e ener gy t o achi eve the same11

economi c outcome.12

So I t hi nk i t i s - - t hat not i on' s13

capt ur ed i n t hi s equi val ent economi c val ue.14

MR. MERRICK: Wel l , t he not i on i s not15

capt ur ed i n ver y much det ai l , so l et me ask you the16

quest i on.17

How' s i t comi ng i n doi ng t he18

negot i at i ons f or i mpr ovi ng t he wor di ng of t hi s agr eement ?19

Ar e you wor ki ng on r ef i ni ng t hi s?20

Thi s i s advanced as a bi ndi ng and21

compl ete document , but admi t t edl y subj ect t o bei ng22

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el abor at ed on.1

MS. TOWER: So t hi s i s, as you say, a2

bi ndi ng agr eement between t he part i es.3

We wi l l - - we haven' t st ar t ed on t he4

next ver si on of t hi s agr eement bef or e we hear f r om t he5

Boar d.6

MR. MERRICK: So there have been no7

f ur t her negot i at i ons t o r ef i ne t hi s. Thi s - - t he document8

t hat we have i n f r ont of us i s t he document as i t exi st s9

t oday bet ween t he par t i es.10

MS. TOWER: I t i s .11

MR. MERRICK: J ust gi ve me one second12

because I ' m not - - I want t o make sur e I under st and t hi s13

i nt er r upt i on i n r edel i ver y.14

The obl i gat i on t o schedul e i nt er r upt ed15

ener gy, i s t hat not subj ect t o t he f or gi vabl e event s?16

MR. O'CONNOR: Yes, i t i s subj ect t o17

f or gi vabl e event s, I guess, under Sect i on 4( d) .18

MR. MERRICK: Yeah, I see i t t here.19

And my quest i on i s, obvi ousl y, f or gi vabl e event s i ncl ude20

Newf oundl and havi ng another use f or i t .21

So I ' m assumi ng t hat i f you r ead t hat ,22

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what i t says i s t hat Newf oundl and - - Nal cor coul d1

i nt er r upt t he suppl y and woul d not have t o reschedul e i f2

nat i ve l oad pr e- empt ed t hat .3 MR. O'CONNOR: They, wi t hi n t he 3654

days, have t o r edel i ver t he ener gy.5

MR. MERRICK: Wel l , i t says at t he6

bot t om of page 6, Cl ause ( d) :7

8

"Sol i ci t at i on cont ract t erm wi l l9

be ext ended accor di ngl y, i f10

necessar y. Nal cor ' s obl i gat i on11

t o schedul e and del i ver t he dai l y12

quant i t i es of Redel i ver abl e13

Ener gy i s subj ect t o For gi vabl e14

Event s, pr ovi ded however t hat15

Nal cor shal l del i ver t he16

t ot al . . . i n accor dance wi t h t he17

f or egoi ng pr ovi si ons. . . "18

19

MR. JANEGA: I f I may, Mr . Mer r i ck, i t20

appl i es i n t hat case i f i t was Tuesday af t er noon t hat t he21

ener gy was i nt ended to f l ow and l oad requi r ed that t o be22

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i nt er r upt ed, i t doesn' t r el i eve t hem f r om havi ng t o1

del i ver i t . I t ' s j ust at t hat part i cul ar per i od of t i me.2

I t ' s not a - - i t ' s not a r emoval of3

t hei r obl i gat i on t o make up t he ener gy. J ust t hat i f i t4

happened on - - as I sai d, on a Tuesday af t ernoon and l oad5

r equi r ed i t , t hen t hey' d have t o del i ver i t t he next day6

or t he next opport uni t y NSP saw t he need.7

MR. MERRICK: Wel l , as I read i t , i t8

says t he obl i gat i on t o schedul e and del i ver t he dai l y9

quant i t i es i s subj ect t o f or gi vabl e event s, whi ch i ncl udes10

nat i ve l oad, pr ovi ded however - - and I t ake i t what you' r e11

t el l i ng me i s t hat you under st and t hat cl ause t o say t hat12

r edel i ver abl e ener gy - - t her e i s a commi t ment f or Nal cor13

t o pr ovi de t he r edel i ver abl e ener gy pr ovi ded i t ' s wi t hi n14

t he 1. 2, I guess.15

MS. TOWER: I t ' s r equi r ed t o be16

del i ver ed. I t i s absol ut el y r equi r ed t o be del i ver ed.17

MR. MERRICK: Al l r i ght . I t al so goes18

on to say down at t he bot t om of page 6 of t hat Cl ause ( d)19

t hat one of t he ot her t hi ngs t hat wi l l happen i s t hat t he20

cont r act t er m wi l l be ext ended accor di ngl y.21

J ust expl ai n t o me how t hat ' s supposed22

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t o wor k. How wi l l t he cont r act t er m be extended and what1

t er m i s i t we' r e t al ki ng about ?2

MR. SIDEBOTTOM: Wel l , we' d be3envi si oni ng t hat t her e wi l l be annual sol i ci t at i ons and4

t her e wi l l be a cer t ai n quant i t y of ener gy. And what5

we' r e t al ki ng about i s t he r edel i ver y of t he ener gy under6

t hat sol i ci t at i on so envi si oni ng t hat t he t er m of t hat7

part i cul ar cont r act woul d have t o be extended t o8

accommodate the redel i ver y per i od.9

And t hat ' s - - i t i s not t he br oader10

r edel i ver y per i od, or t he br oader t er m of t he over al l11

agr eement .12

MR. MERRICK: So that t her e' s an13

i nt er r upt i on of si x mont hs, f or exampl e, say, i n t he - - i n14

t he del i ver abl e - - del i ver y of t hat sur pl us - - t hat15

ener gy, what you' r e sayi ng i s t hat t her e wi l l t hen be an16

extensi on t o t hat one- year t er m t i mef r ame. But how wi l l17

t hat one - - t hat ext ensi on work? Does t hat mean t hat18

Emer a - - Nova Scot i a Power put s out anot her sol i ci t at i on19

f or t he extended si x mont hs and Nal cor bi ds f or an20

extended si x mont hs?21

MR. SIDEBOTTOM: No, i t ' s si mpl y t o22

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encompass t he obl i gat i on of r edel i ver i ng t hat ener gy t hat1

has been t aken t o another market . And so that ext ensi on2

coul d go as f ar as 365 days, ef f ect i vel y.3

And i t ' s t o r eal l y ensur e t hat we4

t r ack and capt ur e, under one cont r act , t he awar d of t he5

RFP and al l equi val ent val ue t hat was associ at ed wi t h i t .6

MR. MERRICK: Panel , you' l l under st and7

why I ' m t aki ng some t i me i n aski ng t hese quest i ons,8

i nept l y, but t r yi ng t o, because i t ' s t he posi t i on of t he9

Consumer Advocate that t here - - i f you l ook at t oo many10

bel l s and whi st l es t acked on t o t hi s f or mul a f or accessi ng11

ener gy, t hat what ' s goi ng t o happen i n t he f ut ur e i s t hat12

Nova Scot i a Power i s goi ng t o go to the market t o access13

energy rather t han goi ng t hr ough t he AEE because i t14

pr ovi des t hem wi t h no benef i t .15

And i f t hat ' s t he scenar i o, t hen we16

haven' t j ust i f i ed t he cost of t hat Nova Scot i a bl ock.17

That ' s t he r at i onal e f or my quest i ons18

and why I ' m spendi ng a l i t t l e bi t of t i me on t hi s because19

we t hi nk i t ' s cri t i cal t o t he pr oposi t i on t hat , at t he end20

of t he day, t hi s i s not goi ng t o be a par t i cul ar l y21

wort hwhi l e mechani sm f or acqui r i ng ener gy f or Nova Scot i a22

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Power.1

But l et me cont i nue wi t h my quest i ons.2

MR. JANEGA: Mr . Mer r i ck, t hough,3bef or e you do, i f we coul d, your quest i ons are per f ect l y4

r easonabl e r el at i ve t o under st andi ng and pr ovi di ng cl ar i t y5

over t he obl i gat i ons t hat Nal cor has; not hi ng unr easonabl e6

about t hem.7

What we' r e t r yi ng t o do i s provi de8

cl ar i t y t hat assur es you t hat t he val ue i s achi evabl e by9

Nova Scot i a Power cust omers. The energy wi l l be del i ver ed10

by Nal cor and t he mi ni mum of 1. 2 wi l l be achi eved wi t h an11

upper l i mi t of 1. 8 t er awat t hour s per year .12

Your quest i ons over t he l ast f ew13

mi nut es have essent i al l y support ed what we' ve been14

pr esent i ng, whi ch i s, even i n t he r edel i ver y i n t hese15

ci r cumst ances, t hose cl auses ar e i nt ended t o ensur e t hat16

Nal cor can' t j ust , at t he end of t he year , r ol l over and17

say, "Wel l , we can' t get t he ener gy t o you. "18

I t cont i nues t o keep t hem commi t t ed,19

and t hey agr eed t o t hese t erms. They agr ee wi t h t he20

pr i nci pl es and t he r epr esent at i ons, i ncl udi ng t he21

di scussi on about how we i nt er pr et t he equi val ent val ue.22

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They have t he same i nt er pret at i on of1

i t . Thi s i s not an agr eement t hat l eaves Nova Scot i a2

Power cust omer s wi t h r i sks. I t ' s an agr eement t hat3

act ual l y sat i sf i es t he condi t i ons and pr ovi des t he4

assurances t hat t hey have t o be del i ver ed.5

MR. MERRICK: But I assume t hat ,6

havi ng l ooked at t he st atement i n t he Newf oundl and7

Legi sl at ur e, you woul d agr ee t hat Newf oundl and - - Nal cor8

i s qui t e pr epar ed t o ent er i nt o agr eement s l i ke t hi s f or9

t he sal e of t he sur pl us 40 per cent of t he ener gy f r om10

Muskrat unt i l t hey need i t t hemsel ves, and when they need11

i t t hemsel ves, i t ' s gone.12

MR. JANEGA: But t here i s commi t ment .13

So i n Nova Scot i a, our r egul at or woul d say the same thi ng14

about f i r m cust omer s; you bui l d gener at i ng capaci t y t o15

ser ve t hem.16

Wi t h t hi s hydr aul i c syst em t hat17

Newf oundl and operates, t hey have a r equi r ement . And i n18

t he f or ecast i ng t hat t hey pr esent ed at t he t echni cal19

conf er ence, and you may recal l t hey t al ked about t hat20

ener gy bei ng a r equi r ement f or t hem t o meet f i r m l oad was21

r epr esent ed as one cur r ent , and we coul d cal l t hat up - -22

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t hat i t em up.1

But above t hat , t hey have t o - - so2

t hat ’ s what t hey have t o have avai l abl e on the syst em as3capaci t y. Ever ythi ng t hat get s pr oduced above t hat i s4

avai l abl e f or sal e.5

So when the Mi ni st er i n Newf oundl and6

speaks about t hei r commi t ment t o suppl y cust omers, t hat ’ s7

act ual l y a good t hi ng f or Nova Scot i a because t hey have t o8

bui l d capaci t y i n or der t o sat i sf y t hat f i r m l oad based9

of f t he l owest over al l hydr aul i c i nf l ows i n Newf oundl and.10

And t hey use a 60- year ser i es of dat a t o pr edi ct t hat , but11

i t ’ s based on t he l owest .12

So ever ythi ng t hey bui l d has t o be13

abl e t o sat i sf y t he f i r m at a mi ni mum. Ever ythi ng above14

t hat i s f or sal e.15

What Nova Scot i a has - - Nova Scot i a16

Power cust omers have wi t h t hi s agr eement i s a commi t ment17

f or Newf oundl and t o sel l t hat , t o of f er t hat t o Nova18

Scot i a f i r st , and i t does pr ovi de benef i t because t hey19

meet t hei r mi ni mum, t hey have to bui l d generat i on based on20

t he mi ni mum i nf l ows. Ever yt hi ng above t hat i s avai l abl e21

f or sal e.22

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And what t he Mi ni st er i s sayi ng i s1

accur ate, have t o serve Newf oundl and cust omers, we’ r e2

goi ng t o have t hi s excess avai l abl e and t hey’ r e wi l l i ng t o3

sel l i t t o Nova Scot i a.4

MR. MERRICK: Do you agr ee t hat on t he5

i nf or mat i on t hat has been pr ovi ded t o us by Nal cor as t o6

t he si t uat i on i n Newf oundl and, i t cer t ai nl y appear s l i kel y7

t hat t her e’ s goi ng t o be a si gni f i cant l y i ncr easi ng demand8

f or nat i ve l oad i n Newf oundl and such t hat i t wi l l , at some9

poi nt , pr e- empt al l t he sur pl us ener gy f r om Muskr at Fal l s?10

MR. JANEGA: Act ual l y, r emember i ng t he11

ear l i er st at ement t hat t hey have t o bui l d f i r m capaci t y12

based on t he mi ni mum i nf l ows, ever y t i me t hey hi t a13

posi t i on wher e t hey can’ t suppl y t he f i r m l oad wi t h t hose14

mi ni mum i nf l ows, t hey have t o bui l d gener at i on.15

And as t hey descr i bed - - I t hi nk i t16

was Mr . J ones or Mr . Humphr i es - - i n t he t echni cal17

conf er ence, t hey wi l l bui l d f i r m gener at i on t o meet t hat18

f i r m r equi r ement . That f i r m r equi r ement , based on mi ni mum19

f l ows, al ways has sur pl us i n i t j ust by t he nat ur e of t he20

way i t ’ s actual l y - - t he r egul at i ons r equi r e t hem t o ser ve21

f i r m l oad.22

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So as t he f i r m l oad gr ows and i t1

st ar t s t o consume sur pl us, t hey pr edi ct and t hey wi l l have2

t o bui l d t o meet t hat f i r m r equi r ement , t hus cr eat i ng mor e3sur pl us ener gy.4

MR. MERRICK: You’ l l have seen i n one5

of t he f i l i ngs t hat was done by Mr . Bi l l Bl ack - - and6

you’ r e awar e t hat he has f i l ed sever al submi ssi ons i n t hi s7

pr oceedi ng. I assume you’ r e awar e of t hose.8

MR. JANEGA: I bel i eve he pr ovi ded9

comment ar i es. I don’ t know - - -10

MR. MERRICK: Comment ar i es.11

MR. JANEGA: - - - i f i t ’ s more t han12

t hat .13

MR. MERRICK: I ’ l l cal l i t t he Bl ack14

scenar i o. He put f or war d t he pr oposi t i on t hat one15

scenar i o t hat was possi bl e was t hat Nal cor woul d pr ovi de16

or bi d or make a f orecast and make avai l abl e f or17

acqui si t i on a f ul l 1. 8 t er awat t hour s a year , and t hat i f18

t hat were t o happen, whet her NSPI t ook t hat energy or not ,19

i t woul d be cr edi t ed agai nst t he mi ni mum r equi r ement of20

1. 2 aver aged out such t hat , at t he end of 16 year s, Nal cor21

woul d have no f ur t her obl i gat i on t o pr ovi de t he guar ant eed22

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mi ni mum.1

Ar e you f ami l i ar wi t h t hat2

pr oposi t i on?3

MR. SIDEBOTTOM: So we ar e f ami l i ar4

wi t h t he pr oposi t i on.5

MR. MERRICK: Do you agr ee i t ’ s6

possi bl e?7

MR. SIDEBOTTOM: No.8

MR. MERRICK: Why not ?9

MR. SIDEBOTTOM: Wel l , I t hi nk hi s10

pr oposi t i on suggest s t her e’ s no obl i gat i on on Nal cor af t er11

t he 16t h year t o bi d i n sur pl us ener gy, and t her e’ s a12

posi t i ve obl i gat i on on t hei r par t t o cont i nue t o of f er us13

t hi s sur pl us ener gy.14

The hydr aul i c syst em i t sel f , i n t he 6015

year s of hydr ol ogy, say t hat t hat i s not a l i kel y16

scenar i o. I woul d pr acti cal l y say i t ’ s i mpossi bl e.17

There’ s no dat a t hat suppor t s t hat ki nd of scenar i o. And18

so I j ust si mpl y don’ t agr ee wi t h hi s pr oposi t i on.19

MR. MERRICK: You sai d t hat Nal cor has20

an obl i gat i on t o cont i nue t o bi d i n even i f t hey’ ve21

exceeded t hei r 1. 2 mi ni mum. But i f you l ook at Cl ause22

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4( e) , i t says Nal cor ’ s r equi r ement s t o bi d t he Nal cor1

f or ecast i s subj ect t o nat i ve l oad.2

MR. SIDEBOTTOM: I t hi nk I ’ d go back3t o Mr . J anega’ s expl anat i on j ust a f ew mi nut es ago, i s4

t hat Newf oundl and i s goi ng t o bui l d t o serve i t s cust omer s5

wi t h r enewabl e energy. And what t hat means i s t hat t hey6

wi l l bui l d suf f i ci ent t o serve t hem i n a f i rm f ashi on,7

whi ch means t hat i f t hey add anot her hydr aul i c syst em,8

anot her hydr o system, t her e wi l l , i n f act , be mor e sur pl us9

ener gy avai l abl e i n t he f ut ur e.10

So act ual l y, t he use of and t he gr owt h11

of l oad i n Newf oundl and and t he f ur t her devel opment of t he12

hydr aul i c syst em or even a wi nd system wi l l f ur t her make13

avai l abl e excess ener gy t o Nova Scot i a as per t hi s14

agr eement .15

MR. MERRICK: I don’ t want t o r epeat ,16

but I j ust want t o make sur e you’ r e get t i ng t he f ocus of17

my quest i on.18

Assume t hat Nal cor has, over 16 years,19

of f er ed and f or ecast 1. 8 t er awat t hour s so t hat , at t he20

end of 16 years, t hey have averaged 1. 2. Under t hat21

scenar i o, ar e t hey not f r ee t o use al l t he r est of t hat22

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surpl us ener gy f or nat i ve l oad, i f t hey have a r equi r ement1

f or nat i ve l oad, wi t hout havi ng t o f or ecast i t and wi t hout2

havi ng t o bi d i t accor di ng t o t he t er ms of t he cont r act ?3

MR. SIDEBOTTOM: So t echni cal l y, I4

suppose i f you coul d i magi ne that t her e was no sur pl us5

ener gy i n t he hydr aul i c syst em, whi ch t her e i s no evi dence6

t o t hat poi nt , and you assumed t hat t he hydr aul i c syst em7

was a per f ect l y l evel number t hr ough t i me, you coul d8

sat i sf y t he commi t ment on t he 1. 2. But you can’ t i gnor e9

t he r est of t he commi t ment s i nsi de of t hi s agr eement ,10

whi ch says t hey have an ongoi ng obl i gat i on t o of f er up t he11

sur pl us ener gy t o Nova Scot i a. And t hat i s a si gni f i cant12

val ue.13

So t hat act ual l y goes t o t he poi nt14

whi ch i s, i f t hey do of f er up 1. 8 t hr ough t he ear l y par t s15

of t he cont r act , t he most l i kel y scenar i o i s t hat t her e16

wi l l be subst ant i al l y mor e ener gy of f er ed t o Nova Scot i a17

t hr ough t he t er m of t hi s t han t he 28 t er awat t s.18

MR. MERRICK: Has Emer a had an19

oppor t uni t y t o di scuss t hi s i ssue wi t h Nal cor ? Was i t a20

subj ect of di scussi on and agr eement ?21

MR. SIDEBOTTOM: Yes, t hey’ r e i n22

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compl et e agr eement wi t h t hi s.1

MR. MERRICK: What commi t ment s have2

t hey gi ven you t hat t hey woul d - - i f t hey had of f er ed t he3f ul l 1. 2 over 16 year s, what commi t ment s have t hey gi ven4

you t hat t hey woul d st i l l cont i nue t o of f er you somet hi ng,5

notwi t hst andi ng what ever t hei r own nat i ve l oad6

r equi r ements may be?7

MR. SIDEBOTTOM: The commi t ment i s set8

out i n t he Energy Access Agr eement , and t he comf ort i s9

gai ned t hr ough t he 60 year s of hydr aul i c dat a t hat10

pr ovi des t he backdr op f or t he excess ener gy.11

MR. MERRICK: Can you poi nt me t o t he12

cl ause t hat gi ves you that assurance?13

MR. SIDEBOTTOM: So t he ongoi ng14

obl i gat i on i s set out i n Cl ause 4 i n ( a) and ( b) , and15

t hose obl i gat i ons cont i nue thr ough the t er m of t he Ener gy16


MR. MERRICK: Al l r i ght . Wel l , I18

guess we can al l r ead t hose as we r ead them.19

Can I t ur n you t o Cl ause 3( e) , whi ch20

i s on page 5, and i t says:21

22

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“Nal cor Suppl i ed Ener gy wi l l be1

f or end- use consumpt i on i n Nova2

Scot i a onl y, except t hat NSPI3

shal l have t he r i ght t o r esel l4

Nal cor Suppl i ed Ener gy i n t he5

event t hat such Ener gy i s surpl us6

t o NSPI ’ s r equi r ement s due to7

var i at i ons . . . ”8

9

Et cet er a, et cet er a.10

Am I r i ght i n under st andi ng t hat11

NSPI ’ s r i ght t o r esel l i s l i mi t ed t o t hat one - - l i mi t ed12

t o t hat one scenar i o t hat ’ s cal l ed f or i n t hat cl ause,13

t hat t hey can r esel l onl y i f such ener gy i s sur pl us t o14

NSPI ’ s r equi r ement s due to var i at i ons i n NSPI ’ s l oad or15

gener at i on i dent i f i ed subsequent t o NSPI ’ s i s accept ance16

of a Nal cor bi d?17

I n ot her wor ds, Nova Scot i a Power i s18

goi ng t o have t o sat i sf y t hat cr i t er i a bef or e t hey coul d19

r esel l any ener gy t hat t hey mi ght have got t en f r om t he20

EAA.21

MR. SIDEBOTTOM: That ' s r i ght . So22

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t hi s i s a recogni t i on t hat t he l oad may be di f f er ent or1

t he gener at i on pr of i l e may be di f f er ent , and under t hose2

condi t i ons we coul d r esel l t he ener gy.3 The i nt ent of t hi s cl ause was, r eal l y,4

t hat Nal cor wasn' t i nt er est ed i n us buyi ng t o r esel l i nt o5

t he market as a market part i ci pant , and our pr i mary use6

and i nt ent was ar ound usi ng i t i n Nova Scot i a. But t her e7

was al so the r ecogni t i on t hat t hi ngs can change, ei t her i n8

t he l oad and t he gener at i on si de, and under t hose9

ci r cumst ances we coul d resel l t he ener gy.10

MR. MERRICK: I s - - does t hi s not put11

a r est r i ct i on on t hat ener gy t hat , t o one ext ent or12

anot her , i s - - woul d be vi ewed as a negat i ve?13

MR. SIDEBOTTOM: No. Remember , Nova14

Scot i a Power has many gener at i on sour ces, and at i t s15

maxi mum at a poi nt i n t i me thi s mi ght r epr esent , you know,16

10 or 20 percent of t he energy at any moment i n t i me, and17

Nova Scot i a Power i s f r ee t o r esel l ot her el ect r ons.18

So ef f ect i vel y, we ar e f ul l y f r ee t o19

sel l i nto t he markets because we have many generat i on20

sour ces. And t he r eal i nt ent of t hi s cl ause i s ar ound21

Nal cor ' s concer n t hat we ar en' t becomi ng a r esel l er of22

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t hei r ener gy i n al t er nat e mar ket s.1

MR. MERRICK: Can I di scuss wi t h you2

f or a f ew mi nut es what happens i f t her e i s a var i ance,3

so- cal l ed, i n ot her wor ds, i f t he - - Nal cor does not4

suppl y the ener gy that i s bei ng pr ovi ded f or ?5

And i f you can t ur n t o Cl ause 7( f ) ( i ) .6

I t ' s on page 10.7

I under st and t he basi c pr oposi t i on8

t hat i f t her e i s a shor t f al l i n t he suppl y of ener gy under9

t he EAA, t hen NSPI pi cks up 300 megawat t hour s of i t .10

MS. TOWER: No, Emera does.11

MR. MERRICK: Emera does. Sorr y;12

you' r e r i ght .13

But t hen we l ook at Cl ause ( f ) ( i ) , and14

i t says t hat NSPI shal l have t he opt i on, but shal l not be15

obl i gat ed t o, const r uct or cont r act wi nd gener at i on t o16

make up t he shor t f al l i n ener gy.17

And I ' m havi ng a l i t t l e t r oubl e18

get t i ng my mi nd ar ound t hat . I f Nal cor i s i n br each of19

t hi s agr eement , why shoul d Nova Scot i a Power i ncur t he20

cost s of bui l di ng wi nd gener at i on t o suppl y t he mi ssi ng21

energy?22

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MS. TOWER: So t hi s i s not1

cont empl ated t hat Nal cor woul d be i n br each.2

MR. MERRICK: Wel l , we' r e t al ki ng her e3about a scenar i o where there i s a - - where the amount of4

ener gy cal l ed f or by the EAA i s not pr ovi ded.5

MS. TOWER: Yes, so t hat t hey woul d i n6

t he - - i n t he, as we' ve di scussed, hi ghl y unl i kel y7

scenar i o t hat t he f or ecast says t hat t her e i s no ener gy or8

t hey wi l l be unabl e t o meet t he 1. 2, t hen Emera and Nal cor9

col l ect i vel y st ep up t o ensur e t hat i t does get pr ovi ded10

t o Nova Scot i a Power.11

MR. MERRICK: And one of t he ways t hat12

Emera woul d st ep up because Emera woul d get t he benef i t of13

t hi s, f i r st of f , Emer a has an obl i gat i on t o pi ck up t he14

f i r st 300 gi gawat t hour s of t he shor t f al l .15

MS. TOWER: Yeah, t o pr ovi de i t i n t he16

same way as descr i bed i n t he pr evi ous sect i ons t hat we' ve17

j ust been t hrough, so t o bi d i t i n every - - on an annual18

basi s. So t o t he extent t hat i t was 150 megawat t s, f or19

exampl e, or GWh, r at her , t hey woul d have t o bi d i t i n.20

They have t o bi d i t i n at t he same - -21

i n t he same way and at t he same pr i ce - - same maxi mum22

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pr i ces as pr ovi ded f or i n t he ear l i er cl auses of t hi s1

agr eement .2

MR. MERRICK: But why shoul d Emer a be3

r el i eved of i t s backst op agr eement by havi ng NSPI bui l d4

wi nd power ?5

NSPI i s t he i nj ur ed par t y i n t hi s6

scenar i o. I t ' s t he one t hat ' s not get t i ng as much ener gy7

as i t maybe other wi se woul d need. And why i s a r emedy f or8

t hat , whi ch of f set s Emer a' s l i abi l i t y - - a r emedy f or t hat9

sayi ng t o NSPI go out and bui l d wi nd?10

MS. TOWER: Thi s i s si mpl y an opt i on,11

and i t woul d be an opt i on t hat woul d be appr oved by t hi s12

Boar d. So i t ' s not meant t o be an obl i gat i on on Nova13

Scot i a Power , but si mpl y an opt i on.14

I f t he best opt i on f or t hem was t o not15

have Emera bi d on an annual basi s and suppl y t hat energy16

on an as needed basi s over t he r emai ni ng t erm, t hen Nova17

Scot i a Power has t he opt i on and i t was r eal l y t i ed t o t he18

opt i on and t he abi l i t y to i nvoke t he bal anci ng r i ght .19

So t her e' s no obl i gat i on on Nova20

Scot i a Power t o bui l d t he wi nd. Si mpl y an opt i on t hat21

woul d be approved by t hi s Board and woul d do t hat under a22

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ci r cumst ance when i t was determi ned t hat i t woul d be the1

l east cost f or cust omer s.2

MR. MERRICK: But - - -3 MR. O'CONNOR: I woul d j ust add, i t4

was - - i t ' s r eal l y her e t o pr ot ect our cust omer s. I t ' s5

r eal l y t her e f or t hat measur e.6

I t i s our opt i on. We wi l l onl y el ect7

i t f or our cust omer s i f i t i s a l ower cost al t er nat i ve8

t han what t he var i ance woul d ot her wi se pr oduce. I t ' s f or9

no ot her r eason at al l .10

And then shoul d we not el ect t he11

opt i on, t hen Emer a has i t s pr ocesses whi ch ar e decl i ne - -12

cl ear l y mar ked out her e. But i t ' s real l y f or t he13

pr ot ect i on of our cust omer s, not t o dr i ve cost s i nt o t hem14

at al l .15

MR. MERRICK: Assumi ng NSPI - - -16

THE CHAIR: Mr . O' Connor , don' t you17

al ways have t hat opt i on?18

I n ot her wor ds, i f at some poi nt t he19

Nal cor energy becomes ver y expensi ve, t he market - pr i ced20

energy becomes ver y expensi ve, you can al ways bui l d t o21

di spl ace i t and not buy i t , can' t you?22

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MR. O'CONNOR: Yes.1

THE CHAIR: So what ' s so pecul i ar2

about t hese 300 megawat t s?3

MR. O'CONNOR: So I t hi nk - - and4

Mr . Si debot t om can maybe speak t o the bal anci ng component .5

I t hi nk that was an i mpor t ant component i n why we want ed6

t o i dent i f y thi s cl ear l y her e because t he bal anci ng i s an7

i mpor t ant and val uabl e f eat ur e of i t . So t hat ' s why i t ' s8

i n t he agr eement .9

And you ar e absol ut el y cor r ect ; we can10

el ect t hat opt i on at any t i me.11

MR. MERRICK: My pr obl em i s - - l et me12

back up f or a second.13

I - - assume t hat NSPI exer ci ses t hat14

opt i on and bui l ds wi nd. I ' m assumi ng t hat what ever t he15

cost of bui l di ng t hat wi nd was get s passed on t o16

r at epayer s. Am I r i ght ?17

MR. SIDEBOTTOM: That ' s cor r ect , but18

t hat i s onl y af t er t he t est t hat i t ' s l east cost f or19

cust omer s. So i t ' s an opt i on t o st ep i nt o a l ower cost20

oppor t uni t y t hat i s al so t i ed ver y much t o a bal anci ng21

ar r angement whi ch i s uni quel y avai l abl e by bei ng t i ed t o a22

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hydr aul i c syst em such as Newf oundl and.1

MR. MERRICK: I f t he cost of t he wi nd2

i s gr eat er t han market but cheaper t han what Nal cor may - -3Nal cor ' s ener gy mi ght have been had Nal cor suppl i ed i t - -4

I ' m j ust sor t of havi ng t o get my mi nd ar ound t hi s.5

Why shoul d NSPI ' s r atepayers pay the6

cost of wi nd when that i s cost i ng them mor e t han woul d7

have been the cost of t he energy under t he EAA?8

MR. SIDEBOTTOM: So t he pr oposi t i on9

you' r e put t i ng t o us woul d be - - woul d not be possi bl e10

because we' r e goi ng t o compare the market pr i ce of energy11

wi t h t he cost of wi nd ener gy wi t h t he associ at ed r i ght s,12

i ncl udi ng t he bal anci ng, and we' r e goi ng t o det er mi ne and13

put bef or e t hi s Boar d f or a capi t al wor k or der as a l east14

cost sol ut i on.15

And so t he onl y r eason we woul d get16

i nt o t hi s opt i on i f i t was a bet t er pr i ce t han t he mar ket17

pr i ce.18

MR. MERRICK: I ' m st i l l havi ng a19

di sconnect , but I can' t f r ame i t as a quest i on.20

Let me ski p on and - - -21

MR. JANEGA: Mr . Mer r i ck, t hough, I22

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t hi nk what Mr . Si debot t om and Mr . O' Connor ar e sayi ng i s1

t hat f i rst - - i n t he f i rst i nstant wi t h t hi s backstop,2

essent i al l y, Emer a i s obl i gat ed t o st ep i n up t o 300 GWh.3

No r i sk t o t he cust omer , not hi ng i s changed. I t4

essent i al l y i s the same as the day pr i or . No exposur e.5

I f Nova Scot i a Power i dent i f i es an6

oppor t uni t y that t hey coul d act ual l y put anot her ener gy7

sour ce i n pl ace, i t j ust gi ves t hem t he r i ght t o access8

t he bal anci ng i f i t ' s anot her - - i f i t ' s an i nt er mi t t ent9

sour ce and t hat was benef i ci al .10

So i t onl y hel ps t o reduce t he cost t o11

cust omer s. I t doesn' t cr eat e any r i sk. I t doesn' t cr eat e12

addi t i onal exposure because t hey have i n t hei r hand t he13

deci si on of cont i nui ng wi t h t he EAA and t hat suppl y14

ar r angement , wi t h t he condi t i ons t hat cap i t at mar ket .15

I t ' s goi ng t o be - - t hat ' s t he most i t16

can be. And i f a wi nd f arm, as an exampl e, cost s more f or17

Emer a t o bui l d i t and pr oduce, al l Emer a woul d get pai d i s18

t hat mar ket pr i ce. I t woul d i ncur t he l oss.19

Nova Scot i a Power has t hat r i ght , not20

an obl i gat i on. They ar e pr ot ect ed i n t hi s pr ovi si on and21

i t l eaves t he cont r ol compl et el y i n t hei r hands.22

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MR. MERRICK: Let me t r y i t on - - t r y1

i t t hi s way. Under t he EAA, NSPI woul d be ent i t l ed t o2

access a cer t ai n amount of power - - l et ' s say i t had been3f orecast and bi d and accept ed –- a cer t ai n amount of4

power .5

Nal cor br eaks t he cont r act i n what ever6

scenar i o you want t o posi t , and says I ' m not suppl yi ng7

t hat energy i n br each of my agr eement , not because I ' m8

ent i t l ed t o i nt er r upt servi ce. But i n br each of t he9

agr eement , I ' m not goi ng t o suppl y t hat ener gy.10

As I r ead t hi s cont r act , Nova Scot i a11

Power coul d say, wel l l i st en, we' r e shor t t hat amount of12

ener gy. We' r e goi ng t o bui l d wi nd t o r epl ace i t . Wi nd i s13

goi ng t o be more expensi ve t han EAA, but st i l l a good14

pr udent pur chase i n t he mar ket pl ace wi t h ot her opt i ons15

consi dered. But t hen Nova Scot i a Power has t o pay more16

f or wi nd t han i t cer t ai nl y woul d have had t o pay f or t he17

EAA power .18

MS. TOWER: J ust to be cl ear , t hat - -19

what ' s cont empl at ed i s not when Nal cor ' s i n br each of t hi s20

cont r act , so j ust t o be cl ear on t hat .21

MR. MERRICK: When t her e' s an22

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wher e we shoul d si t and be t hi nki ng about a br each of t hat1

ar r angement . I don' t t hi nk t hat ' s a r easonabl e st at e wi t h2

t he i mpor t ance t hat Nova Scot i a wi l l pl ay i n t hei r3at t ai ni ng access t o t he mar ket . I t hi nk t hat ' s4

unr easonabl e.5

MR. MERRICK: Mr . J anega, I under st and6

t hat , but appr eci at e wher e I ' m comi ng f r om.7

Ever y t i me I see a pr ovi si on t hat says8

Emera gets t o do somethi ng t hat doesn' t cost t hem any9

money, my al ar m bel l s go of f and I t r y to f i gur e out10

what ' s goi ng on. But l et me come back t o t he quest i on.11

Taki ng your scenar i o, Ms. Tower , t hat12

t her e has been a f ai l ur e t o pr ovi de t he 1. 2 so that13

t her e' s a var i ance, one of t he opt i ons avai l abl e t o NSPI14

i s t o bui l d wi nd t o r epl ace t hat shor t f al l , t hat var i ance.15

MS. TOWER: At t hei r opt i on, yes.16

MR. MERRICK: At t hei r opt i on. I f17

t hey do so, but at a pr i ce much hi gher t han t he EAA energy18

t hat t hey shoul d have been get t i ng - - -19

MS. TOWER: So I can' t i magi ne t hi s20

Boar d woul d appr ove t hat .21

MR. O'CONNOR: We won' t do t hat .22

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There' s no r eason f or us, nor any l ogi c f or us t o do t hat .1

I f t he EAA and Emer a' s obl i gat i on i s a2

l ower cost sol ut i on, we wi l l mer el y enf or ce t hat upon3

Emer a t hat t hey have t o meet t hat obl i gat i on.4

I f we, t hr ough Nova Scot i a Power , can5

f i nd an al t er nat i ve f or our cust omer s t hat ' s cheaper or6

l ower pr i ced, we want t o be abl e to have t hat opt i on, and7

t hat ' s what t hi s - – i t gi ves us. And i t gi ves us the8

opt i on t hen t o ut i l i ze t he bal anci ng servi ce agr eement as9

wel l .10

So I j ust want t o be cl ear t hat t hat11

won' t happen as you descr i bed i t .12

MR. MERRICK: Wel l , bear wi t h me j ust13

one mor e moment .14

Assume the wor st and t hat i t di d, t hat15

Nal cor di d not meet i t s mi ni mum obl i gat i on under t he EAA.16

So t her e i s a shor t age i n t he ener gy t hat ot her wi se NSPI17

woul d have been ent i t l ed t o achi eve at EAA pr i ci ng so t hat18

t he next best al t er nat i ve i n t he mar ket , t aki ng al l19

f actor s i nt o consi der at i on, i s bui l di ng wi nd.20

So Nova Scot i a Power bui l ds wi nd, but21

at a gr eat er cost t han i t shoul d ot her wi se have been22

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acqui r i ng t he ener gy f r om Nal cor .1

Why does t hat r el i eve Emer a of i t s2

r esponsi bi l i t y t o backst op t he i ni t i al l oss?3 MS. TOWER: So t her e' s no scenar i o4

wher e ener gy get s bi d i n at ot her t han EAA pr i ci ng. So5

when and i f Emer a and NALCOR have t o st ep up under Cl ause6

7, i t get s bi d i n at exact l y t he same pr i ce as out l i ned i n7

Cl ause 4( c) .8

Those pr i ces, t hose mar ket pr i ces,9

st i l l appl y i n t hat si t uat i on so t her e' s no scenar i o - -10

t her e' s no scenar i o as you descr i be i t wher e t hat pr i ci ng11

i s no l onger avai l abl e because i t i s al ways avai l abl e, t he12

mar ket pr i ci ng.13

So t he i dea of t he EAA i s t hat t her e14

i s mar ket ener gy assur ed t o Nova Scot i a Power ul t i mat el y15

and, at t he end of t he day, t hat t her e i s an obl i gat i on by16

par t i es t o bi d at mar ket pr i ces i nt o sol i ci t at i ons by Nova17

Scot i a Power .18

MR. MERRICK: Let me move on, t o t he19

r el i ef of ever yone.20

Let me ask you about t he pr ovi si on,21

t he pr i ci ng mechani sm t hat Nal cor - - t he Nal cor bi d pr i ce.22

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I t ' s on page 6, Cl ause 4( c) .1

THE CHAIR: Mr . Mer r i ck, bef or e you go2

on, j ust t al ki ng t o Mr . Deveau, I t hi nk i t ' s i mpor t ant3

t hat we have a cl ear under st andi ng, t hat i s, t he Boar d, as4

t o how t hi s wor ks.5

And t hat ' s t he –- and I apol ogi ze f or6

i nt er r upt i ng, but I don' t want t o be conf used on t hi s.7

As I under st and i t , i n t he8

ci r cumst ances wher e t he var i ance happens and Emera has t o9

st ep i n, we st i l l have a pot of 1. 2 t er awat t hour s a year .10

But at t hat poi nt , Emer a i s r esponsi bl e f or 300 and Nal cor11

i s r esponsi bl e f or t he bal ance.12

So what woul d happen i s, t her e woul d13

be bi ds f r om Nal cor and f r om Emer a to - – at mar ket pr i ces,14

and Nova Scot i a Power can st i l l accept al l or par t of15

t hose bi ds.16

So am I cor r ect t hus f ar ?17

MS. TOWER: You ar e cor r ect .18

THE CHAIR: Good. So t hen t he onl y19

scenar i o that I see where Nova Scot i a Power woul d bui l d - –20

and t hi s i s wher e I t hi nk the cont r act i s conf usi ng peopl e21

–- where Nova Scot i a Power woul d bui l d i t s own generat i on22

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i s i f i t coul d beat t he mar ket pr i ce. But i t coul d do1

t hat i n year one or year ni ne or year 24.2

But t her e i s st i l l t he obl i gat i on once3t he var i ance happens t o bi d 1, 200 - - 1. 2 t er awat t hour s a4

year . I t ' s j ust t hat t he bi d i s comi ng f r om t wo di f f er ent5

peopl e at mar ket pr i ces.6

MS. TOWER: That ' s cor r ect.7

THE CHAIR: Have I st at ed t hat8

cor r ectl y?9

MS. TOWER: That i s cor r ect.10

THE CHAIR: I t hi nk i t ' s f ai r l y11

f undament al t hat we al l under st and how t hi s cont r act i s12

supposed t o work.13

MR. MERRICK: Oh, absol ut el y. I14

appr eci ate t hat . And I may need some r emedi al l essons i n15

i t , I suppose.16

THE CHAIR: So i t woul d make no sense17

f or Nova Scot i a Power, assumi ng t hey were get t i ng t he bi ds18

on t he 12 –- 1. 2 t er awat t hour s, t o bui l d somet hi ng i f i t19

was more expensi ve.20

And as t hey say, we woul dn' t al l ow21

t hat t o happen.22

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MR. MERRICK: And t hat may be –- t hat1

may al l evi at e my concer n. I j ust have t o t ake a l i t t l e2

t i me and t hi nk i t t hr ough because - - -3

THE CHAIR: Wel l , I j ust don' t want4

t he recor d conf used because I t hought I under st ood i t5

goi ng i n. And I nor mal l y woul dn' t i nt er r upt , but i t ' s6

such an i mpor t ant poi nt , I t hi nk i t ' s - - -7

MR. MERRICK: Yes.8

THE CHAIR: I want t o make sur e t hat9

t hat ' s t he way t he cont r act ' s i nt ended t o wor k. And I ' m10

l ooki ng over t o my l ef t her e - - -11

MS. TOWER: Absol ut el y.12

MR. SIDEBOTTOM: That i s cor r ect.13

MR. MERRICK: Al l r i ght . Comi ng t o14

t he bi d pr i ce –- and t her e' s j ust one aspect of t hi s15

mechani sm t hat I want t o expl or e.16

At t he t i me of t he or i gi nal17

appl i cat i on, my under st andi ng was t hat t he pr i ce t hat was18

bei ng consi dered was r ef erenced as bei ng t he Mass Hub19

pr i ce and t hat what t hi s cl ause does i s i t adds one mor e20

component t o i t i n t hat , i f t her e' s any al t er nat i ve spot -21

mar ket oppor t uni t i es t hat pr ovi de a hi gher pr i ce, t hen22

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Nal cor ' s ent i t l ed t o bi d t hat hi gher pr i ce.1

My quest i on t o you i s, how hard di d2

Emera negot i ate to t r y t o get t hat down so t hat we3woul dn' t have t hat cl ause, al t er nat i ve spot - mar ket4

oppor t uni t i es, t hat mi ght , i n f act, j ust i f y a pr i ce hi gher5

t han Mass Hub?6

How bi g a negot i at i ng i t em was t hat ?7

MS. TOWER: So maybe I ' l l say a coupl e8

of t hi ngs about t hat .9

What we –- what t he negot i at i ons were10

t r yi ng t o do was get access t o ener gy at mar ket pr i ces.11

And so t o the extent t hat t her e' s a Mass Hub pr i ce or12

Nal cor has a –- can access anot her mar ket , we bel i eve t hat13

i s mar ket pr i ces.14

The ot her i nt er est i ng t hi ng about t hi s15

i s t hat t he l i kel y al t er nat e mar ket f or t hat ener gy, and16

we woul d have di scussed t hi s t hr ough t he negot i at i ons, i s17

t he New York market .18

And so i f we were t o model t hi s t oday19

under t he same scenar i o as we di d f or t he or i gi nal20

appl i cat i on, t he economi cs woul d not change because, as we21

di scussed dur i ng t he hear i ng, t he mar ket - - t he New Yor k22

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mar ket t r adi t i onal l y t r ades at a l ower pr i ce.1

So we were qui t e comf or t abl e wi t h2

t hi s, f or t hose t wo r easons, t hat i t was a mar ket pr i ce.3

And I t hi nk t he ot her t hi ng, i t ' s4

hel pf ul t o r emi nd us al l i s t hat t hi s an up t o pr i ce.5

Thi s i s a maxi mum pr i ce. And we can speak t o how - – and6

my col l eagues f r om Nova Scot i a Power can speak t o how i t7

wi l l wor k i n t he moment , but we t r ul y bel i eve t hat t her e8

wi l l be a l esser pr i ce t han t hi s. The oppor t uni t y i s9

t her e f or a l ower pr i ce t o be bi d. Thi s i s t he maxi mum10

pr i ce, an up t o pr i ce.11

MR. MERRICK: I appr eci at e t hat . And12

because i t i s t he maxi mum per mi ssi bl e pr i ce, one has t o13

ant i ci pat e t hat t hat may wel l be used by Nal cor t o char ge14

t hat pr i ce.15

MS. TOWER: Maybe, but t he - - t her e16

wi l l be compet i t i ve sol i ci t at i ons. So I assume t hat17

t hey' l l - - t o t he ext ent t hat t hey' r e l ooki ng t o sel l18

t hei r ener gy, whi ch I t hi nk i s t hei r obj ecti ve, t hey wi l l19

pr i ce i t at a pr i ce t o wi n t he bi d.20

MR. MERRICK: I f you wer e t o - - -21

MR. O'CONNOR: Sor r y. I f I j ust may22

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add somethi ng.1

J ust t o t he negot i at i ons of t he2

cont r act and t he poi nt s wi t hi n i t , Mr . Si debot t om and I3vi gor ousl y negot i at ed f or Nova Scot i a Power on al l of t he4

cont r act s. I j ust di dn’ t want t her e t o be any doubt about5

t hat poi nt .6

MR. MERRICK: And di d you al so - - -7

MR. DEVEAU: Sor r y. Agai n, j ust on8

t hat ver y poi nt , I can' t f i nd i t r i ght now, but t her e' s - -9

i t seems t o me there' s a paragr aph i n t he agr eement t hat10

speaks t o t he concern t hat t he Boar d had about i t bei ng11

concei vabl e t hat Nal cor mi ght want t o secur e anot her12

cont r act wi t h another part y, pr esumabl y someone l i ke New13

Yor k and Ont ar i o, and t hat t hey mi ght do so j ust t o secur e14

a l onger - t erm cont r act down t he r oad when 2041 becomes15

avai l abl e.16

And i t seems t o me t hat t hi s cl ause,17

t hi s - - t he addi t i on of t hi s al t er nat e spot mar ket , and18

t hat someone l i ke New Yor k and Ont ar i o mi ght be wi l l i ng t o19

pay more f or havi ng - - you know, f or some ener gy now wi t h20

t he pr omi se t hat , af t er 2041, t hey coul d get a l ot mor e21

af t er t he Quebec cont r act f i ni shes.22

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So i t seems t o me that t hi s cl ause was1

actual l y - - yes, i t benef i t s Nal cor , but i t was di r ectl y2

count er act t hat concer n that t he Boar d had t hat i t ' s3

concei vabl e t hat t hat coul d happen and that , you know,4

t hat scenar i o wher e sor t of , you know, shor t cut s Emer a or5

Nova Scot i a Power out of t he quest i on.6

MR. SIDEBOTTOM: Maybe I coul d j ust7

t al k a bi t about t hat .8

I t hi nk one of t he ver y si gni f i cant9

commi t ment s i s t hat Nal cor has r eserved t hei r ener gy unt i l10

we get t he f i r st oppor t uni t y t o bi d on t hat . And t hat11

happens ever y year .12

And I r emember t he concern of t he13

Boar d, and what t hi s does i s, bef or e anyone el se get s t he14

oppor t uni t y to t r ansact , Nova Scot i a Power deci des i f i t ' s15

economi c f or i t s cust omer s i n f r ont of bei ng of f er ed i nt o16

t he mar ket .17

And t hat , of cour se, al so l i mi t s t he18

abi l i t y f or any cont r act i ng t o be, at a maxi mum, 12 mont hs19

f or Nal cor f or t hi s ener gy as wel l .20

So those ar e val uabl e t o Nova Scot i a21

and Nova Scot i ans, and the al t er nat e pr i ci ng under page22

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6( 2) ( i ) j ust si mpl y r epr esent s t hat i f you can get t o a1

pl ace and you can get t her e wi t h r eal t r ansmi ssi on, i t i s,2

by def aul t , t he market pr i ce. Whether we - - whether we3l i ke i t or not , t hat i s t he mar ket pr i ce and t hat ' s what4

t he ener gy woul d f et ch i n t he f ut ur e.5

As i t si t s r i ght now, t he Mass Hub i s,6

i n f act , t he hi gher of t he t wo mar ket s and so even7

i ncor por at i ng t hi s cl ause i n t he model l i ng woul dn' t change8

t he out come, so t hat hopef ul l y t hat hel ps a bi t .9

MR. DEVEAU: J ust t o compl et e t he10

ci r cl e, t he - - act ual l y, t he par agr aph I ' m r ef er r i ng t o i s11

par agr aph 205. And i t ' s - - and I ' l l j ust r ead i t .12

Par agr aph 205, and t he f our t h l i ne f r om t he bot t om:13

14

"I t i s not i nconcei vabl e t hat15

Nal cor coul d see t he benef i t of16

expor t i ng mar ket - pr i ced ener gy to17

New Engl and rat her t han t o Nova18

Scot i a on a shor t t er m uneconomi c19

basi s i n or der t o secur e t he mor e20

l ucr at i ve l onger - t er m ar r angement21

wi t h t he count erpart y i n New22

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Engl and af t er t he 35- year t er m of1

t he Nal cor t r ansact i on wi t h Nova2

Scot i a. " ( As r ead)3

4

Whi ch i s - - and obvi ousl y, 2041 pl ays5

i nt o t hat .6

So when t he Boar d wr ote t hat , i t was7

i n t er ms of shor t - t er m uneconomi c basi s, and obvi ousl y8

i t ' s debat abl e whet her t hat shor t - t er m uneconomi c basi s9

f or Nal cor or f or t he ot her spot mar ket , whet her i t ' s New10

Engl and or New Yor k.11

So you know, concei vabl y, per haps New12

Yor k woul d pay mor e now f or anythi ng mor e t han mar ket and13

t o secur e a r el at i onshi p wi t h Nal cor f or - - you know, f or14

more power af t er 2041.15

So i t appear s t hat t hi s al t er nat i ve16

spot market t hat ' s i n t he agr eement was somethi ng t hat ,17

you know, Nal cor negot i at ed f or , you know, t o ci r cumvent18

t hat . So t hat - - you know, t hat was the quest i on.19

MS. TOWER: Commi ssi oner Deveau, I20

t hi nk t he ot her t hi ng i n Mor r i son Par k - - and t hat may be21

what you were t hi nki ng about . Morr i son Par k addr esses t he22

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i ssue as wel l i n t hei r evi dence, and i t says t hat t he1

possi bi l i t y of Nal cor cont r act i ng wi t h ot her t ar get s f or2

i t s expor t s, l ong- t er m cont r act s, i s concl usi ve and3bi ndi ng. Nal cor must of f er power i nt o NSPI ' s annual4

st at i on and cannot commi t t hat power t o anyone el se on a5

mul t i - year basi s.6

So I t hi nk t hat ' s t he ot her t hi ng.7

MR. DEVEAU: But we' r e not t al ki ng8

about t he commi t ment t her e. We' r e t al ki ng about t he9

abi l i t y t o say t her e' s an al t er nat i ve spot mar ket or we10

can del i ver t o somebody el se.11

I t goes t hr ough pr i ci ng, not t he - -12

not t he - - you know, t he commi t ment . I mean, pr i ci ng,13

basi cal l y, can shor t - cut t he commi t ment .14

MS. TOWER: I was goi ng t o - - i n or der15

t o get t he l onger - t er m deal , was t he par t t hat I t hought16

t hat you wer e r ef er r i ng t o.17

MR. DEVEAU: Sor r y, Mr . Mer r i ck.18

MR. MERRICK: No pr obl em. J ust l et me19

f i ni sh t he poi nt t hat ' s my concer n.20

What posi t i on, what ef f or t s di d Emer a21

t ake t o t r y to l i mi t or cap or r educe t he pr i ce t hat22

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Nal cor was goi ng t o be ent i t l ed t o char ge?1

As we l ook at t hi s cl ause, t he2

addi t i on of t he al t er nat i ve spot - mar ket oppor t uni t i es can,3

accor di ng t o our vi ew, be vi ewed as possi bl y - - as t o4

cr eat i ng t he possi bi l i t y of a hi gher pr i ce bei ng abl e t o5

be charged over what mi ght ot her wi se have been t he Mass6

Hub pr i ci ng mechani sm.7

What ef f ort di d Emera take to cap or8

l i mi t or r educe t he pr i ce t hat ' s goi ng t o have t o be pai d9

by r atepayers f or t he EAA energy?10

MR. O'CONNOR: The pr i ci ng condi t i ons11

as out l i ned i n t he Ener gy Access Agr eement ar e, I t hi nk12

i t ' s i mpor t ant and cr i t i cal t o under st and, up t o. They do13

not say t hey wi l l be.14

So t he - - i t i s our bel i ef t hat t he15

mar ket wi l l st ar t t o oper at e mor e f ul l y and mor e pr oper l y16

and t hat we wi l l see pr i ces t hat ar e up t o t hat , not at17

t he cap or at t he max.18

And as Ms. Tower hi ghl i ght ed, t he19

second pr i ci ng component as we t hi nk about what t hose20

pr i ces ar e compared t o Mass Hub are subst ant i al l y bel ow21

i t . So we bel i eve t her e' s i ncr ement al val ue t o our22

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cust omer s because t hi s i s up t o and woul d ant i ci pat e that ,1

over t i me, mar ket f or ces wi l l pr evai l and i t ' s l i kel y t hat2

we see pr i ces bel ow Mass Hub.3 MR. MERRICK: I ' m l ooki ng at t he4

wor di ng on page 6 of Cl ause ( c) , t he l ast sent ence t hat5

says:6

7

"Pri ci ng up t o t he gr eat er of ( i )8

and ( i i ) above shal l be deemed t o9

be a good f ai t h bi d wi t h r espect10

t o pr i ce. " ( As r ead)11

12

So obvi ousl y, Nal cor i s ent i t l ed t o go13

t o t he hi gher of t he t wo.14

MR. O'CONNOR: That ' s cor r ect .15

MR. MERRICK: J ust f r om - - what16

ef f ort s were made to make i t t he l ower of t he two?17

MR. O'CONNOR: So what we' ve achi eved18

her e i s mar ket val ue f or t he ener gy. And I bel i eve t hat ' s19

what t he Boar d i nst r uct ed us t o do, and we' ve - - i n t hi s,20

r ef l ect t hose mar ket r eal i t i es.21

MR. MERRICK: Al l r i ght . That br i ngs22

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me t o my l ast poi nt . Mr . J anega, I ' l l l ook t o you as I1

phr ase the quest i on.2

One of t he maj or r i sks t hat we woul d3

see on behal f of r at epayer s i s t hat t hi s EAA agr eement4

r eal l y, i n t he l ong t er m, t ur ns out t o be of l i mi t ed val ue5

or i nt er est because i n t he l ong t er m NSPI wi l l have bet t er6

market opport uni t i es t o acqui r e energy under more7

t r adi t i onal t er ms of negot i at i on, under mor e f l exi bl e8

t er ms i n negot i at i on, under t er ms t hat wi l l be mor e9

at t r act i ve t han t he bel l s and whi st l es t hat come at t ached10

t o EAA such t hat t he ener gy obt ai ned under t he EAA i s of11

- - does not f i nal l y, at t he end of t he day, of f set t he12

i ncr eased cost s of t he Nova Scot i a bl ock.13

I n ot her wor ds, t hat ever yt hi ng t hat14

can - - ever ythi ng i n t he EAA - - t hat any ener gy acqui r ed15

under t he EAA never does of f set t hat Nova Scot i a bl ock16

pr i ci ng.17

I n t hat case, woul d not r at epayer s be18

wor se of f ?19

MR. SIDEBOTTOM: So I - - actual l y, i f20

Nova Scot i a i s not sel ect i ng t he ener gy under t he EAA, i t21

means i t ' s f ound l ower cost opt i ons. And t hat coul d be22

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occur r i ng because now we' r e connected at t wo poi nt s i n t he1

mar ket and ener gy i s f l owi ng t hr ough t hi s provi nce.2

I t ' s goi ng t o put us i n an3advant ageous pl ace. And I t hi nk t hat i s wher e t he val ue4

pr oposi t i on comes i n i n t hi s par t i cul ar case. I t ' s t he5

connect i on t o two market s, and t hat we ar e on the way t o a6

mar ket t hat ul t i mat el y gi ves us t he best val ue.7

Thi s agr eement guar antees us access t o8

amount of ener gy, but I woul d expect t hat we’ l l be doi ng9

energy deal s out si de of t he commi t t ed amount and i n ot her10

quant i t i es and st r uct ur es because t he market i s much more11

f ul some.12

MR. MERRICK: And t hat ’ s my concern,13

Mr . Si debot t om. And i f i t ’ s - - i f t hose ar e advant ages14

t hat wi l l come wi t h t he f ut ur e i n any event , not because15

of t he EAA, but t hey’ r e comi ng i n any event , t hen t hat ’ s16

somethi ng t hat r atepayers woul d have had t he advantage of17

anyway and shoul dn’ t have had t o pay the cost of t he Nova18

Scot i a bl ock t o get i t .19

MR. SIDEBOTTOM: I t hi nk t he i mpor t ant20

par t t hat I put out f i r st i s t hat we have t wo connect i ons.21

Thi s par t i cul ar i nvest ment i s t o cr eate t he second22

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connect i on. I f you don’ t make t hat i nvest ment t he mar ket1

doesn’ t devel op i n t he same way. You can’ t separate one2

f r om t he ot her .3

MR. MERRICK: I s t her e any evi dence at4

al l t hat woul d say t hat i f t he compl i ance f i l i ng i s5

r ej ect ed by t he Boar d t hat Muskr at Fal l s i s not goi ng6

ahead?7

MR. JANEGA: Mr . Mer r i ck, I t hi nk8

t her e’ s anot her pi ece bef or e I answer your quest i on on9

what about t hi s hear i ng. Nova Scot i a Power cust omers do10

not have access t o ener gy on any t erms and condi t i ons11

si mi l ar t o t hi s EAA t oday. Ther e i s no ener gy access t hat12

Nova Scot i a Power has been abl e t o achi eve t hat al i gns or13

even comes cl ose t o the pr ovi si ons and covenant s of t hi s14

agr eement - - of t he Energy Access Agr eement .15

So I di sagr ee wi t h t he pr emi se t hat16

t her e wi l l be no ener gy t r ansact or pot ent i al l y no ener gy17

t r ansact under t hi s.18

The f i r st t hi ng t hat happens i s t he19

Mar i t i me Li nk i s pl ugged i n and t he mar ket i s cr eat ed, as20

Mr . Si debot t om has i ndi cat ed, whi ch cr eat es a new f ut ur e21

st at e f or Nova Scot i a.22

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The second i s, you have f i r st r i ght of1

r ef usal t o pur chase ener gy at mar ket pr i ces at t he2

gr eat est i t can be. The hi ghest i t can be i s t he mar ket3pr i ce t hat you can’ t at t ai n t oday because you can’ t get4

t he energy here t oday.5

So you get t hat as your second6

posi t i on wi t h t he EAA, whi ch i s a f i r st r i ght of r ef usal7

t o Newf oundl and and Labr ador ’ s sur pl us energy up t o 1. 88

t er awat t hour s per year . I f you don’ t want t o pur chase9

t hat , i f Nova Scot i a Power deci ded I ’ m goi ng t o t r y10

somet hi ng di f f er ent t hi s year , t hat ener gy i s st i l l11

avai l abl e t o be sol d i n t he mar ket pl ace and i s st i l l12

avai l abl e tomor r ow mor ni ng, or t he next day, or t he next13

hour .14

I f t her e i s a vol ume t hat comes on t op15

of what i s bi d i nt o t he sol i ci t at i on or mor e r ai n f al l s,16

Nova Scot i a Power i s i n a posi t i on t o pur chase t hat ener gy17

f or i t s cust omer s at pr i ces t hat ar e not avai l abl e t o Nova18

Scot i a t oday.19

So t o do anythi ng t o di mi ni sh t he20

val ue t hat ’ s cr eat ed by t he EAA and t o i ndi cat e t hat t her e21

ar e ot her opt i ons t hat ar e out t her e mi ght be si mi l ar t o22

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i t , t hey do not exi st t oday f or Nova Scot i a and onl y exi st1

wi t h t he Mar i t i me Li nk and wi t h t he EAA t hat ’ s i n f r ont of2

t he Boar d.3

MR. MERRICK: And t he EAA avai l abi l i t y4

doesn’ t exi st t oday ei t her .5

Let me ask you t hi s, once Muskr at6

Fal l s i s pl ugged i n, Nova Scot i a Power has r eal l y at l east7

t wo opt i ons, doesn’ t i t ; i t can t ake power under t he EAA,8

assumi ng i t ent er s i nt o t hat agr eement , or i t can go i nt o9

t he mar ket t o take ener gy; r i ght ?10

MR. JANEGA: So make t he f i r st11

pr esumpt i on t hat wi t hout t he agr eement , whi ch was expect ed12

by t he Boar d as a par t of t hi s - - of t he condi t i ons of t he13

pr i or appr oval , t hat t hi s sat i sf i es t hat condi t i on and14

cr eat es t hi s mar ket oppor t uni t y f or Nova Scot i a t hat15

doesn’ t exi st pr i or t o t he Mar i t i me Li nk or pr i or t o t he16

EAA, t hen I t hi nk t hat ’ s t he t est as t o whet her or not17

Nova Scot i a Power cr eat es, because of t hi s, bet t er18

oppor t uni t i es af t er t hat t hat ar e enabl ed by thi s, I t hi nk19

t hat ’ s what we’ ve been ext ol l i ng as t he benef i t s of t he20

Mar i t i me Li nk and t he i nt er connect i on al l t he way t hr ough21

t hese hear i ng pr ocesses.22

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But what was r equest ed was - - you were1

one of t he advocat es of - - t r y t o get conf i dence f or us2

t hat t hat ener gy wi l l be avai l abl e. Thi s agr eement goes3wel l beyond creat i ng conf i dence. I t creat es a f i r st r i ght4

of r ef usal f or Nova Scot i a t o access t hat ener gy. That5

goes wel l beyond what was or i gi nal l y ant i ci pat ed, i n our6

vi ew, at pr i ci ng t hat Nova Scot i a Power has been abl e t o7

get embedded i n cont r act , whi ch was another poi nt t hat was8

t al ked about , i s we don’ t know what t he f i nal pr i ci ng wi l l9

be.10

Her e you have demonst r at ed i n an11

obl i gat i on f r om Nal cor t o bi d i n and t hat ’ s t he most t hey12

can char ge f or t he ener gy. The mar ket wi l l act ual l y13

det er mi ne i f i t ’ s a l ower pr i ce t han t hat . Nova Scot i a14

Power doesn’ t buy t he ener gy one day t he l i kel i hood i s15

t hat t he pr i ce i s goi ng t o be a bi t l ower t he next day.16

I f i t ’ s f l owi ng t o mar ket and you deci ded not t o buy i t ,17

t he next day you have t he oppor t uni t y t o buy i t agai n.18

So t her e ar e mul t i pl e l ayer s of19

benef i t t hat ar e embedded i n t hi s agr eement t hat I know i t20

may have some t er ms t hat we need t o spend t i me t o expl ai n21

and make sur e t hey’ r e underst ood, but we absol ut el y22

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bel i eve i t creat es f i r st choi ce f or Nova Scot i a, whi ch i s1

what we were asked t o do, i s get access t o ener gy at2

mar ket pr i ces.3

MR. MERRICK: I am corr ect , am I not ,4

i n sayi ng t hat once i t ’ s pl ugged i n, once Muskrat Fal l s i s5

pl ugged i n, Nova Scot i a Power wi l l have t he abi l i t y t o buy6

under t he EAA or t o go i nto t he market and buy on what ever7

t er ms i t seems appr opr i at e at t hat t i me; cor r ect ?8

MR. SIDEBOTTOM: That i s cor r ect.9

MR. MERRICK: And i f i t buys on10

what ever t er ms i t wi shes on i t s own, t hat ’ s not because of11

any commi t ment t hat i t made i n t he EAA, t hat ’ s somethi ng12

t hat i t woul d be ent i t l ed t o do anyway? I t hasn’ t come t o13

i t t hr ough t he EAA?14

MR. SIDEBOTTOM: That ’ s r i ght . We15

have t he f l exi bi l i t y i n t he EAA t o sel ect i n what ever16

quant i t y t he amount of energy t hat makes sense f or Nova17

Scot i a cust omer s, and so t hat ’ s act ual l y par t of t he val ue18

we have. I t ’ s not a - - i t ’ s not somet hi ng t hat you’ r e19

f or ced t o t ake. I t ’ s onl y under economi c condi t i ons do20

you sol i ci t and awar d t hat ener gy.21

MR. MERRICK: I t ’ s sor t of l i ke22

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Page 2712 NSUARB-ML-2013-01/M05419


get t i ng i nt o a r ock concer t , I suppose.1

MR. JANEGA: Actual l y i t ’ s a backst op.2

What t hi s i s, i s t hi s i s an assur ance t hat t hi s i s t he3vol ume of energy you have access t o t hat support s t he4

or i gi nal i nvest ment i n t he Mar i t i me Li nk t hat l ower s t he5

aver age cost t o Nova Scot i a cust omer s. Thi s i s t he par t6

t hat you wer e l ooki ng f or was t hat assurance t hat t her e’ s7

addi t i onal ener gy. Thi s del i ver s i t .8

I f you can do bet t er t han t hat i t ’ s9

onl y because you cr eat ed t he opport uni t y by havi ng the EAA10

i n your hand.11

MR. MERRICK: What I ’ m l ooki ng f or i s12

benef i t s f r om t he EAA whi ch of f set and j ust i f y t he cost of13

t he Nova Scot i a bl ock. I s t hi s agr eement wor t h t he Nova14

Scot i a bl ock?15

MR. JANEGA: Absol ut el y.16

MR. MERRICK: Does i t gi ve us enough17

val ue?18

MR. JANEGA: Absol ut el y.19

MR. MERRICK: And i f - - -20

MR. JANEGA: I t del i ver s exact l y what21

was present ed.22

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MR. MERRICK: J ust l et me f i ni sh my1

quest i on. And i f at t he end of t he day Nova Scot i a Power2

has t he abi l i t y t o buy power i n t he mar ket , wi t hout goi ng3

t hr ough t hi s EAA, t hen that ’ s not a cost t hat can be used4

t o j ust i f y t he Nova Scot i a bl ock; t he onl y j ust i f i cat i on5

f or t he Nova Scot i a bl ock i s i f t her e’ s somet hi ng of6

advant age under t hi s agr eement t hat i t has t aken, but i f7

Nova Scot i a Power deci des i t ’ s not wor t h t aki ng cer t ai n8

purchases under here because t hey can get i t on bet t er9

t er ms, mor e f l exi bl e t er ms, mor e l eni ent t er ms i n t he10

market , t hen t hat ’ s somet hi ng i t woul d have been ent i t l ed11

t o do anyway?12

MR. SIDEBOTTOM: I t hi nk we may have13

al r eady addr essed t hi s. We bel i eve t hat t he second14

connect i on act ual l y creat es a ver y val uabl e mar ket i n Nova15

Scot i a. I t cr eat es a compet i t i ve envi r onment . The EAA16

gi ves t he assur ance of access t o mar ket - pr i ced ener gy.17

And Nova Scot i a Power has t he f r eedom t o choose t he best18

ener gy sour ce and pr i ce at t hat t i me i n t he f ut ur e. So19

al l of t hose t hi ngs go t oget her , i ncl udi ng t he actual - -20

t he physi cal connect i on i t sel f t o creat e val ue f or21

cust omer s.22

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Page 2714 NSUARB-ML-2013-01/M05419


MR. MERRICK: That ’ s al l I have, Mr .1

Chai r man.2

THE CHAIR: Thank you, Mr . Mer r i ck.3We’ l l t ake a 15- mi nut e br eak.4

- - - Upon r ecessi ng at 11: 10 a. m.5

- - - Upon r esumi ng at 11: 31 a. m.6

MR. RICK JANEGA, Resumed:7

MS. NANCY TOWER, Resumed:8

MR. MARK SIDEBOTTOM, Resumed:9

MR. WAYNE O’CONNOR, Resumed:10

THE CHAIR: Mr . Bl ackbur n?11

MR. BLACKBURN: Thanks, Mr . Chai r . I12

want t o thank my col l eague, Mr . Mer r i ck, f or hi s t hor ough13

anal ysi s. I had a l ot quest i ons si mi l ar t o hi s and I14

scr atched a l ot of t hem out so maybe I can expedi t e some15

of my quest i ons t o t he panel .16

CROSS-EXAMINATION BY MR. BLACKBURN17

MR. BLACKBURN: I n a quest i on by Mr .18

Mer r i ck, I bel i eve - - I ’ m not sur e whi ch one i t was now - -19

t hat i ndi cat ed t hat t he mi ni mum of 1. 2 t er awat t s per hour20

was based on t he l ow l oad t hat you i nt er pr et at t he21

deci si on?22

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MR. SIDEBOTTOM: That i s cor r ect, yes.1

MR. BLACKBURN: Yeah. And i n2

par agr aph 228 of t he deci si on, i t says:3

4

“Accor di ngl y, t he Boar d di r ect s5

as a condi t i on t o i t s appr oval of6

t he ML Proj ect t hat NSPML obt ai n7

f r om Nal cor t he r i ght t o access8

Nal cor Mar ket - pr i ced Ener gy9

( consi st ent wi t h t he assumpt i ons10

i n t he Appl i cat i on as not ed i n11

NSUARB I R- 37. . . Fi gur e 4- 4) when12

needed t o economi cal l y ser ve NSPI13

and i t s r at epayer s; or pr ovi de14

some other ar r angement t o ensure15

access t o Mar ket - pr i ced Ener gy. ”16

17

Where i n t hat di d you determi ne that18

i t had t o be on t he l ow l oad?19

MR. SIDEBOTTOM: Wel l , I t hi nk we r ead20

t he deci si on as a whol e and we al so t ook a l ook at page21

38, par agr aph 103, whi ch t al ks t o t he l ow l oad bei ng t he22

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Page 2716 NSUARB-ML-2013-01/M05419


mor e l i kel y l oad al i gned wi t h NSP’ s cur r ent f or ecast . And1

we f ound t hat i nst r uct i ve i n t he way we st r uct ur ed t he2

access of ener gy.3 MR. BLACKBURN: Al l r i ght . I ’ l l j ust4

move on t hen but i t ’ s mor e f or ar gument , but I j ust - - i t5

i s on t he readi ng of 228; t her e was no r ef er ence by t he6

Boar d t o the l ow l oad.7

And I want t o get i nt o - - t ouch on8

some aspect s of t he agr eement - - t hat ’ s t he Energy Access9

Agreement - - so t hat ’ s Appendi x A of M- 134. Per haps we10

can br i ng t hat up.11

Okay. Page 5 of 16, t hat ’ s par agr aph12

3, par agr aph f . Okay. Do we have t hat ? I t ’ s f - - 3( f ) ;13

t her e i t i s, “Ener gy- Onl y Pr oduct . ” Okay.14

The def i ni t i on of Ener gy- Onl y Pr oduct :15

16

“Nal cor Suppl i ed Ener gy shal l be17

pr ovi ded t o NSPI as an energy-18

onl y pr oduct . For gr eat er19

cer t ai nt y, Nal cor r et ai ns al l20

r i ght s and val ue associ at ed wi t h21

such Ener gy i n r espect of22

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Capaci t y and GHG Cr edi t s. ”1

2

That di f f er s f r om t he appl i cat i on,3

doesn’ t i t ?4

MR. SIDEBOTTOM: No, t he appl i cat i on5

does have - - i t actual l y i s set out t hat i t ’ s an ener gy or6

economy pr oj ect t hat i s model l ed and i s pr i ced t hat way i n7

t he model s.8

MR. BLACKBURN: So you’ r e - - ar e you9

sayi ng t hat i n t he model , t he GHG cr edi t s wer en’ t - -10

di dn’ t go t o NSPI ?11

MR. SIDEBOTTOM: I f you t ake a l ook at12

t he l ow- l oad scenar i o, we meet t he RES r equi r ement s and13

al l of t he envi r onment al r equi r ement s around t he14

gr eenhouse gr ass wi t hout t he excess energy bei ng r equi r ed15

t o have any of t he ot her at t r i but es, and t her ef or e, i t ’ s16

an ener gy- onl y pr oduct .17

Ther e’ s suf f i ci ent ot her ener gy f r om18

t he Nova Scot i a bl ock and t he ot her r enewabl es act ual l y19

set out and pl anned f or i n t he Nova Scot i a Gener at i on Pl an20

t o sat i sf y that condi t i on t hr ough t he pl anni ng per i od.21

MR. BLACKBURN: But what woul d you do22

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Page 2718 NSUARB-ML-2013-01/M05419


i f - - f or i nst ance, I mean, i f NSPI needed t he credi t s,1

you’ d have t o go out and pur chase i t , whi ch t he rat epayer s2

woul d have t o pay f or , so why woul d you ass i gn t hose3credi t s t o Nal cor ?4

MR. SIDEBOTTOM: I mi ght t ur n t hat5

ar ound anot her way and say, why woul d you pay f or a pi ece6

of a pr oduct t hat you don’ t need? I f , i n t he f ut ur e, you7

f i nd you need t hat pr oduct , t hen you go out and f i nd t he8

most economi c way t o acqui r e t hat pr oduct at t he t i me. We9

don’ t need anyt hi ng other t han economy energy t o sat i sf y10

t he needs of t hi s l ow- l oad case.11

MR. BLACKBURN: I j ust want t o move on12

t her e t o some of t he t er ms and def i ni t i ons. Agai n, go t o13

par agr aph ( d) , same page - - j ust scr ol l up i f you coul d?14

Thanks.15

“The [ def i ni t i on of ] t er m of t hi s16

Agreement and t he Fi nal Agreement17

shal l commence on Ful l Power and18

shal l t er mi nat e on August 31. . . ”19

20

So i f f ul l power i s not 2017, i t ’ s21

2018 or what ever , ’ 19, t hat ’ s when i t commences?22

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MS. TOWER: That ’ s r i ght . I t ’ s - - -1

MR. BLACKBURN: Okay.2

MS. TOWER: - - - when t he f our t h uni t3

i s i n.4

MR. BLACKBURN: Okay. Let ’ s j ust t al k5

about i t f or a qui ck second. So now t here has been work6

done on t he pr oj ect . Anyt hi ng - - -7

MS. TOWER: There’ s work bei ng done at8

Muskr at ; i s t hat - - -9

MR. BLACKBURN: Yes.10

MS. TOWER: - - - i s that what you mean?11

Yes.12

MR. BLACKBURN: Yes.13

MS. TOWER: Yes.14

MR. BLACKBURN: Have you any r eason t o15

bel i eve t hat i t ’ s not goi ng t o go on- st r eam i n 2017?16

MR. JANEGA: No.17

MR. BLACKBURN: Thi s day?18

MR. JANEGA: No, we know - - -19

MR. BLACKBURN: No del ays or anyt hi ng20

l i ke t hat t hat you’ r e awar e of ?21

MR. JANEGA: We know i t ’ s a l ong- t er m,22

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Page 2720 NSUARB-ML-2013-01/M05419


mul t i - year pr oj ect . I mean, t her e ar e pot ent i al s f or1

pr oj ects t o hi t r oadbl ocks. But , no, t hey’ r e st i l l2

i ndi cat i ng t hat t hey wi l l have gener at i ons st ar t i ng i n32017.4

MR. BLACKBURN: Okay. Why di d you - -5

why does t hi s agr eement j ust go t o 2041? The appl i cat i on6

t hat was f i l ed was - - had a 35- year t er m and t hi s i s what7

t he Boar d had r ef er enced i n i t s deci si on as wel l , i n8

paragr aph 226 of t he Boar d’ s deci si on. So you - - per haps9

you can j ust expl ai n agai n; why i s t he t er m t o 2041?10

MS. TOWER: So agai n, we di d - - we11

r ead al l of t he deci si on and i nt er pr et ed t he condi t i on i n12

l i ght of al l t he par agr aphs of t he deci si on. And13

par agr aph 200 r ef l ect s a l ot of t he di scussi on t hat14

happened dur i ng t he cour se of t he hear i ng. But t he Boar d15

f ound t hat t he evi dence cl ear l y showed t hat t here was no16

shor t age of mar ket - pr i ced ener gy, even when t he Chur chi l l17

Fal l s arr angement wi t h Hydr o Quebec comes t o concl usi on i n18

2041.19

So we cer t ai nl y bel i eve t hat and t he20

Boar d f ound t hat t o be t he case. So we set out t o get an21

agr eement unt i l t hat poi nt when we knew t her e woul d be22

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l ot s of sur pl us ener gy.1

MR. BLACKBURN: The r eason I ’ m sayi ng2

i s t hat i f my memor y ser ves cor r ect - - and I ’ m sor r y, I3

don’ t have i t i n f r ont of me, but at t he Li nk hear i ng i n4

J une, di dn’ t - - wasn’ t t here some r ef er ence t hat t here was5

t al k about a 50- year t er m or what ever , t hen Nal cor want ed6

t o have a 35- year t erm. Now i t appear s t hat Nal cor want s7

t o have a 24- year t erm. Do you r ecal l t hat ?8

MS. TOWER: I t hi nk t here was some9

di scussi on about 50 ver sus 35, yes.10

MR. BLACKBURN: Yes, and I bel i eve i t11

was a Nal cor - dr i ven mat t er ; do you r ecal l t hat ?12

MS. TOWER: I can’ t r emember t he13

speci f i cs. We’ d have t o cal l up t he t r anscri pt - - -14

MR. BLACKBURN: Yeah.15

MS. TOWER: - - - but - - -16

MR. BLACKBURN: I ’ m sor r y I don’ t have17

i t i n f r ont of me but I made some notes and I shoul d have18

t i ed i t i n, but was t hi s dr i ven by Nal cor t hen, t he 24-19

year t er m as opposed t o NSPI and - - -20

MS. TOWER: Thi s was r eal l y dr i ven by21

t he f act t hat we al l bel i eved and t he Boar d f ound t hat22

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Page 2722 NSUARB-ML-2013-01/M05419


af t er 2041 t her e woul d be l ot s of mar ket - pr i ced ener gy.1

And what t he condi t i on asked of us was t hat we get2

assur ance of market - pr i ced energy. And so we set out t o3do t hat and bel i eve we’ ve f ul f i l l ed t hat condi t i on.4

MR. BLACKBURN: I ’ m a l i t t l e cur i ous5

about a f ew wordi ngs. Now, perhaps we can j ust scr ol l on6

t he same page - - okay, 4( a) at t he bot t om - - 5, 6 - - r i ght7

t her e, t hanks:8

9

“Nal cor For ecast - - On a mont hl y10

basi s dur i ng the Ter m, Nal cor11

wi l l pr ovi de a good f ai t h12

f or ecast t o NSPI . . . ” 13

14

Why do you use t he word “good f ai t h”?15

I not i ce t hr oughout her e, and we’ l l go t o t he next page i n16

a mi nut e and anot her good f ai t h and so f or t h. I s t her e17

r eason t o put t hat i n? I mean, sur el y t o goodness t hat18

goes wi t hout sayi ng i t ’ s a good f ai t h. I s ther e a r eason19

t hat “good f ai t h” was put i n t her e?20

THE CHAIR: Some l awyer made t hem do21

i t .22

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MR. BLACKBURN: The l awyer made t hem1

- - -2

(LAUGHTER)3

MS. TOWER: I was goi ng t o say - - -4

MR. BLACKBURN: Mr . Chai r , I ’ l l buy5

t hat .6

MS. TOWER: Yeah, t hat ’ s r i ght .7

MR. BLACKBURN: Okay. No, no, I j ust8

- - i t ’ s j ust f or a good- f ai t h f or ecast and so f or t h. And9

i t goes on t o say:10

“. . . avai l abl e. . . t o NSPI f or t he11

f ol l owi ng 24 mont hs, [ a f or ecast12

of 24 mont hs] up t o a maxi mum of13

1. 8. . . per Cont r act Year . . . ”14

15

And you i ndi cat ed a whi l e ago, I16

t hi nk, Ms. Tower , t hat t he mi ni mum wi l l be 1. 7 - - 1. 217

t erawat t s per hour per year guar ant eed.18

MS. TOWER: Guar ant eed on aver age 1. 219

t er awat t hour s per year over t he t er m of t he cont r act ;20

t hat ’ s cor r ect .21

MR. BLACKBURN: And j ust whi l e we’ r e22

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Page 2724 NSUARB-ML-2013-01/M05419


on t hat , as Mr . Mer r i ck had i ndi cat ed - - but l et ’ s j ust go1

over t o t he - - qui ckl y to page 7 of 16, par agr aph ( e) t he2

“For gi vabl e Event s”; I j ust want t o t ouch on t hat f or a3mi nut e.4

( e) For gi vabl e event s. Okay. So5

not wi t hst andi ng i t says t hat - - so you' r e sayi ng t hat 1. 26

on average per year . And we have t he f orgi vabl e event s7

t hat i f Newf oundl and and Labr ador needed i t or hydr ol ogy8

event s, f or ce maj eur e, saf et y event , a f or ced out age, an9

act i on requi r ed t o be t aken by any par t y t o compl y wi t h10

t he good ut i l i t y pr acti ce.11

Then you went on t o say, "However" ;12

and we go t o t he sect i on - - okay, as - - I guess - - t hi s i s13

on page 2. Go r i ght t o t he bot t om of t he - - page 7. Her e14

we are. The bot t om of t he page, t he commi t ment .15

So you' r e sayi ng t hat i t ' s guar ant eed,16

no quest i on, on aver age 1. 2 to Mr . Mer r i ck because17

not wi t hst andi ng t he f or gi vabl e event , but i t ' s subj ect t o18

7( e) ( i ) and t o f or ce maj eur e event s Nal cor wi l l make19

avai l abl e at l east 1. 2 per cont r act year .20

So you' r e sayi ng t hat t hose f or gi vabl e21

event s t hat Newf oundl and needs t hat ar e - - t hat doesn' t22

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appl y. Al l t hat appl i es her e, t hey' r e guar ant eed 1. 2 on1

aver age, subj ect t o 7( e) ( i ) - - l et ' s l ook at 7( e) ( i ) .2

Next page; t op of t he next page. Or3

7( e) ( i ) , I shoul d say, deal s wi t h t he commi t ment :4

5

"The amount of Ener gy made6

avai l abl e by Nal cor t o NSPI i n7

each Cont r act Year used t o8

det er mi ne f ul f i l l ment of t he9

Commi t ment shal l be cal cul ated as10

t he sum of :11

( i ) Nal cor Suppl i ed Ener gy i n12

such year . . . "13

14

So t he Nal cor suppl i ed ener gy i n each15

year of 1. 2 t er awat t s, i t ' s onl y subj ect t o f or ce maj eur e.16

I s t hat what you' r e sayi ng?17

MS. TOWER : Sor r y. Mr . Bl ackbur n, I ' m18

not seei ng t hat cl ause.19

MR. BLACKBURN: Oh, I ' m sor r y. Okay.20

MR. OUTHOUSE: That ' s not qui t e t he21

r i ght r ef er ence, I t hi nk.22

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Page 2726 NSUARB-ML-2013-01/M05419


MR. BLACKBURN: I sn' t i t , 6( a) ?1

MR. OUTHOUSE: I f you l ook on page 92

- - -3 MR. BLACKBURN: I ' m sor r y. Yeah, I4

got t he wr ong - - -5

MR. OUTHOUSE: You' l l see (e) ( i ) .6

MR. BLACKBURN: Yes, (e) ( i ) . Yes.7

Okay. I ' m sor r y, you' r e r i ght . Okay.8

So page 9. We go t o page 9 ( e) ( i ) .9

Okay, t here we are. Okay. And:10

11

"Emera and Nal cor Var i ance12

Amount s - Subj ect t o f or ce13

maj eur e event s, Emera and Nal cor14

shal l be r esponsi bl e f or any15

Var i ance as f ol l ows. . . "16

17

So i f t hey don' t , t hen Emera comes up18

wi t h 300 GWh and Nal cor ' s responsi bl e f or t he bal ance. I s19

that correct?20

So t hat ' s what you' r e t yi ng i n.21

You' r e sayi ng i t ' s guar anteed t o t he 1. 2, subj ect t o f or ce22

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maj eur e.1

MS. TOWER : That i s cor r ect .2

MR. BLACKBURN: Okay. Now, my second3

quest i on i s, wher e i s f or ce maj eur e def i ned i n t hi s4

agreement ?5

MS. TOWER : So f or ce maj eur e i s not6

def i ned i n t hi s agr eement yet . I t wi l l be def i ned i n t he7

next ver si on of t hi s agr eement .8

I t has been def i ned i n t he Energy and9

Capaci t y Agreement and the ot her agr eement s t hat we10

negot i ated i n t he set of f ormal agr eement s. And my11

expectat i on i s t hat t hat def i ni t i on, t he def i ni t i on t hat12

ends up i n t he agr eement , woul d be ver y si mi l ar t o t hat .13

MR. BLACKBURN: I s t he r eason - - t hi s14

agr eement , my under st andi ng i s, i t ' s basi cal l y a done deal15

other t han what?16

I mean, ar e we j ust t al ki ng about17

f i nal i zi ng some of t he wor di ng, or what do you ant i ci pat e18

i s goi ng t o be di f f er ent f r om t hi s Ener gy Access19

Agr eement , t hen, t hat ' s goi ng t o be f i nal i zed, hopef ul l y,20

by Oct ober of 2014?21

MS. TOWER : I f you l ook i n Cl ause22

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2( a) , we t al k i n t her e about what ot her t hi ngs we expect1

t o f i nal i ze i n t he f i nal agr eement , t he def i ni t i ve2

agr eement , i ncl udi ng - - -3 MR. BLACKBURN: J ust - - hol d on a4

second.5

MS. TOWER : Sor r y. Page 4 of 16,6

2( a) .7

MR. BLACKBURN: Page 4 of 16. J ust8

one second. Okay.9

MS. TOWER : So about t he mi ddl e of t he10

- - sor r y, t he mi ddl e of t he par agr aph.11

MR. BLACKBURN: Yeah.12

MS. TOWER : I t says:13

14

". . . appr opr i at e t er ms f or15

t r ansacti on [ si c] of t hi s nat ur e16

cont empl ated by thi s Agr eement ,17

i ncl udi ng as r equi r ed t ax, audi t18

r i ght s, f or ce maj eur e and19

met er i ng pr ovi si ons, and t he20

st andar d agr eement t empl at e. . . "21

22

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You mi ght r emember t hat t he def i ni t i ve1

agr eement s as f i l ed under t he appl i cat i on had a f ai r l y2

consi st ent t empl ate. And we woul d expect t hat t hose and3

ot her t hi ngs woul d be - - mai nl y t hose t hi ngs woul d be4

i ncl uded i n t hi s.5

We were anxi ous t o get t hi s agreement6

f i nal i zed and di dn' t want t o wai t t o do t he - - t hose ot her7

t hi ngs.8

MR. BLACKBURN: I guess what I ' m9

t r oubl ed about i s, i t i ncl udes i ncl udi ng. For i nst ance,10

Nal cor coul d say, "Wel l , we" - - f or i nst ance, i f you' r e11

aski ng t he Boar d - - i f you' r e aski ng t he Boar d t o appr ove12

t hi s, whi ch i ncl udes t he appendi x that you' r e f i l i ng,13

we' r e tal ki ng about an agr eement - - t o ent er i nt o an14

agreement by August 1st , 2014. And i f you don' t , t hen you15

have a di sput e r esol ut i on pr ocedur e t o t r y t o deal wi t h16

i ssues.17

So what i f t hi s - - some mat er i al18

changes shoul d come up? How - - l et ' s say Nal cor deci des19

t o have a change of hear t about a f ew of t he mater i al20

condi t i ons i n t he agr eement ?21

How do we deal wi t h t hat ? We don' t22

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di dn' t check. Page 6 of 16( c) .1

Ther e i t i s. Thank you.2

MR. O'CONNOR : So i t i s t he pr i ce as3descr i bed her e. Ther e i s no l anguage t hat says ther e4

woul d - - coul d be a pr emi um added t o t hat . I f - - i f5

t hey' r e choosi ng t hi s, i t ' s pr esumabl y because i t ' s hi gher6

than ( i ) - - -7

MR. BLACKBURN: That ' s what I meant .8

MR. O'CONNOR : Okay. Yeah.9

MR. BLACKBURN: Sor r y I di dn' t phr ase10

i t proper l y.11

MR. O'CONNOR : So yes, i t - - -12

MR. BLACKBURN: So - - -13

MR. O'CONNOR : I t al l ows i f t hat pr i ce14

was, i ndeed, hi gher t han ( i ) t hat t hey coul d el ect t o15

pr i ce under ( i i ) .16

MR. BLACKBURN: And wi t h - - you' r e17

awar e of - - i t came up at t he hear i ng i n J une t hat var i ous18

New Engl and st ates have now passed r egul at i ons deal i ng19

wi t h renewabl e energy and gr een energy, and so t here' s20

pr obabl y goi ng t o be a mar ket f or i t and pr obabl y i t wi l l21

be t he ki nd of mar ket , say, her e t hr ough t he Muskr at - -22

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t hrough Nal cor or t hr ough Quebec Hydr o, I suppose, or1

what ever .2

But - - so i s i t mor e pr obabl e t han3

not ? I guess t hat ' s my quest i on, t hat t her e' s pr obabl y4

goi ng t o be al t er nat e spot mar ket s and t here' s goi ng t o be5

a pr emi um at t ached to i t , whi ch means t hat Nova Scot i a6

Power are goi ng t o be payi ng a pr emi um and t he r atepayers7

ar e goi ng t o be payi ng a pr emi um?8

MR. O'CONNOR : No, I - - I di sagr ee9

wi t h t hat compl et el y.10

Thi s t al ks about an al t er nat i ve spot11

mar ket , whi ch i s f or ener gy onl y. I t i s a separ at e and12

di st i nct f r om what ever t he r enewabl es or capaci t y. Those13

ar e separ at e mar ket s.14

They woul d not - - and t he val ue of15

t hose mar ket s woul d not be i n t hi s pr i ci ng. And i f Nal cor16

wer e t r yi ng t o achi eve t he val ue f or t hat , t hey woul d have17

t o do i t under some ot her mechani sm.18

We wi l l not pay f or t hose ot her19

at t r i but es t hr ough t hi s pri ci ng mechani sm.20

MR. BLACKBURN: Okay. I f t her e i s an21

al t er nat i ve buyer , I don' t see anyt hi ng i n t hi s agr eement ,22

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t hat ' s t he Ener gy Access Agr eement , t hat t he - - t hat an1

al t er nat e buyer of t hi s pr emi um pr oduct t o be subj ect t o2

any of t he requi r ement s t hat Nova Scot i a Power has, such3as sel l i ng - - you know, t o r esel l t he sur pl us ener gy that4

t hey don' t need or ot her condi t i ons t hat ar e i n t he5

cont r act.6

I s - - was t her e any i nt ent i on t hat i f7

t her e was an al t er nat e buyer t hat t he - - t hat t hey woul d8

be subj ect t o si mi l ar condi t i ons of Nova Scot i a Power ?9

MR. O'CONNOR: So t he Energy Access10

Agr eement cl ear l y says t hat t here can be no other11

al t er nat i ve buyer s unt i l i t i s of f er ed t o Nova Scot i a12

Power t hr ough t he sol i ci t at i on pr ocess. And t hr ough t hat13

pr ocess, i f we el ect not t o take t he ener gy, t hen Nal cor14

i s f r ee t o sel l i t t o t hem. And we' ve never di scussed15

what t hose t er ms and condi t i ons mi ght l ook l i ke.16

MR. BLACKBURN: Ri ght . That ' s my17

poi nt .18

So you r esel l i t t o whoever and t her e19

wi l l be no si mi l ar condi t i ons t hat ar e at t ached t o Nova20

Scot i a Power .21

I n ot her wor ds, t her e' s cl auses i n22

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here deal i ng wi t h Nova Scot i a Power can - - you know, t hey1

can' t r esel l ot her t han on a l i mi t ed condi t i on, f or2

i nst ance.3

MR. O'CONNOR: So i f we acqui r e energy4

t hr ough t he sol i ci t at i on, t he t er ms and condi t i ons t hat5

ar e her e wi l l appl y t o al l of t hat ener gy. I f we buy6

ener gy f r om t hem or anyone el se under a di f f er ent7

ar r angement , of cour se, t hese t erms woul d not appl y to8

t hose t r ansact i ons.9

MR. BLACKBURN: Al so deal i ng wi t h10

vol ume, I mean, we' r e - - does - - t he al t er nat e buyer , does11

he have to purchase t he exact same vol ume per mont h that ' s12

of f er ed t o NSPI ?13

See, t he - - I guess what I ' m t r yi ng t o14

get , was t here any t hought gi ven when t hi s was negot i ated15

t hat i f t her e was an al t er nat e buyer t hat per haps t he same16

t er ms and condi t i ons woul d be put on NSPI . And i f not , i f17

t he answer i s, wel l , why, t hen why di d - - why does NSPI - -18

why are you get t i ng - - why di d you negot i ate such a19

r est r i ct i ve agr eement ?20

MR. O'CONNOR: I guess I don' t agr ee21

wi t h t he wor ds, " r est r i ct i ve agr eement . "22

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I t hi nk t her e' s a good amount of1

f l exi bi l i t y i n t he agr eement , t hat t hese ar e commer ci al l y2

r easonabl e t erms t hat we' ve come t o wi t h Nal cor . They3r ef l ect i ndust r y st andar d t ypes of cl auses. And I don' t4

- - I guess I don' t agr ee wi t h your pr emi se.5

MR. JANEGA: Mr . Bl ackbur n, but nobody6

el se has the oppor t uni t y t hat Nova Scot i a Power has. Par t7

of t he - - t hi s i s a package t hat nobody el se has, so you8

can' t l ook t o anot her agr eement t o compare i t because Nova9

Scot i a Power has t he r i ght of f i r st r ef usal of t hi s10

ener gy.11

MR. BLACKBURN: Di d Nova Scot i a Power12

ever have an agr eement t hat - - wi t h r est r i ct i ons of what13

t hey can do wi t h the power when they purchase i t ?14

MR. JANEGA: I can r ecal l a number of15

agr eement s wher e we ar e buyi ng f r om a par t y and t her e ar e16

resal e restr i ct i ons.17

I t ' s act ual l y qui t e common i n18

commer ci al pr act i ce t hat i f you ar e a sel l er of a pr oduct ,19

t he - - t her e ar e some r est r i ct i ons on r esel l i ng. So t hat20

i s not unusual at al l .21

But I t hi nk, as I ' ve al r eady22

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t est i f i ed, we mai nt ai n al l t he f l exi bi l i t y we need t hr ough1

both cl auses t hat ar e set out i n t he EAA and our2

under l yi ng abi l i t y t o buy and sel l i nt o t he mar ket because3

we have a por t f ol i o gener at i on.4

So t he mai n i nt ent f or t he r est r i ct i on5

on r esal e was si mpl y Nal cor not want i ng us t o become a6

mar ket r esel l er of t hei r ener gy. And t hat ' s al l i t i s.7

And i t doesn' t r est r i ct us f r om8

opt i mi zi ng t he energy we have once commi t t ed t o.9

MR. BLACKBURN: Go back on t he10

agr eement t o - - I mean, we' r e on t he - - l et me j ust check11

now. Page 7 of 16. Agai n, i t ' s par agr aph 80 under ,12

“For gi vabl e Event s. ”13

Ther e' s a coupl e of f or gi vabl e event s14

t hat I ' m not sure what t hey mean, and per haps you can j ust15

- - or somebody can l et me know.16

I t r ef er s t o a saf et y event . I17

suppose t hat ' s - - what woul d be an exampl e of t hat?18

MR. SIDEBOTTOM: A saf et y event i s i f19

you f i nd somet hi ng unsaf e on your syst em or your20

equi pment , t he ver y appr opr i at e t hi ng t o do i s t o shut21

down and secur e i t and r epai r t he pi ece of equi pment . And22

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t hat ' s a saf et y event .1

MR. BLACKBURN: And an act i on requi r ed2

t o be t aken by any par t y to compl y wi t h good ut i l i t y3pr act i ce, what does t hat mean?4

MR. SIDEBOTTOM: Any number of t hi ngs,5

but i f t her e ar e cer t ai n t est i ng t hat ' s r equi r ed by6

r egul at or y bodi es f or r el i abi l i t y pur poses, t hat mi ght7

mean t hat a pi ece of equi pment i s t aken out t o be test ed8

and pr oven t hat i t ' s rel i abl e and appr opr i at e. And t hat ' s9

one of an exampl e t hat we woul d have ther e.10

MR. BLACKBURN: And r ef er j ust f or my11

edi f i cat i on, t he Edi son El ectr i cal I nst i t ut e St andar d For m12

Mast er Pur chase and Sal e Agr eement ; i s t hi s somethi ng13

st andar d i n t he i ndust r y?14

MR. O'CONNOR: Yes. Yeah, i t ' s a15

st andar d cont r act .16

MR. BLACKBURN: I t hi nk Mr . Mer r i ck17

covered most of t he other - - my ot her quest i ons on t he18

agr eement .19

(SHORT PAUSE)20

MR. BLACKBURN: I t hi nk t hose ar e my21

quest i ons.22

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THE CHAIR: Thanks ver y much.1

Lower Power Rat es Al l i ance.2

MR. MacDONALD: Good mor ni ng.3

THE CHAIR: Good mor ni ng.4

MR. MacDONALD: Or af t er noon, I guess.5

CROSS-EXAMINATION BY MR. MacDONALD6

MS. TOWER: Good mor ni ng.7

MR. MacDONALD: Good mor ni ng.8

J ust a coupl e of quest i ons I have,9

most l y cont ai ni ng t he RES, t he Renewabl e Energy St andards.10

I f we can put Exhi bi t M- 14 up, page 1520.11

(SHORT PAUSE)12

MR. MacDONALD: Thank you, yes.13

J ust we want t o cl ar i f y some poi nt s14

about t hi s char t her e, so we' r e sayi ng l i ne 1, t he year ,15

l i ne 2, exi st i ng r enewabl es, bot h NSPI - owned and I PPs. I16

won' t go thr ough al l of t hem.17

But i s i t f ai r t o say, I guess, f rom18

your under st andi ng t hat l i ne 7 - - or sor r y, l i ne 7 i s19

t ot al RES r enewabl e - - el i gi bl e r enewal s. And t hen - - so20

l i ne 7 i s the sum of l i ne 1 t hr ough 5 mi nus l i ne 6. I s21

t hat f ai r enough?22

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MS. TOWER: Do we have t he r i ght char t1

up? I t ' s i ndi genous wi nd l ow l oad?2

MR. MacDONALD: Oh, no, we don' t .3Sor r y. Fi f t een t went y ( 1520) , At t achment 3, page 1, yes.4

That ’ s cor r ect .5

Okay. Sor r y about t hat . So j ust6

agai n, goi ng t hr ough t he cat egor i es, and we’ r e sayi ng - -7

so l i ne 7, t hat bei ng t ot al RES el i gi bl e r enewabl es, i s8

basi cal l y the sum of l i nes 1 t hr ough 5 mi nus l i ne 6.9

MR. SIDEBOTTOM: That ’ s cor r ect, yes.10

MR. MacDONALD: Okay. Goi ng back t o11

t he ear l i er hear i ng, i t was acknowl edged i n t he t est i mony12

t hat i mpor t s over t he Nova Scot i a- New Br unswi ck t i e l i ne13

ar e not expect ed t o be RES el i gi bl e. I s t hat cor r ect ?14

MR. SIDEBOTTOM: I t hi nk t hey coul d15

be, but i t woul d r equi r e acknowl edgment of t hat l ar ge16

hydr o.17

MR. MacDONALD: Okay. So i s - - t he18

f i gur es her e i n t he t ot al RES el i gi bl e, does t hat i ncl ude19

t he f act t hat t he Nova Scot i a and New Br unswi ck ones are20

el i gi bl e, or not ?21

MR. SIDEBOTTOM: Thi s par t i cul ar t abl e22

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shows t hem as count i ng t owar ds el i gi bl e renewabl e, and I1

t hi nk what ’ s hel pf ul , and I t hi nk I sai d ear l i er , i s t hat2

- - I don’ t see t he l i ne number s, but t he one t i t l ed3

"r enewabl es NSP owned and I PP" , you can see i t as4

appr oxi mat el y 3. 2 t er awat t s of ener gy t her e.5

MR. MacDONALD: Yes.6

MR. SIDEBOTTOM: And t hen under7

cont r act , t he base bl ock and suppl ement al , whi ch i s t he8

next l i ne down, whi ch goes bet ween about 1. 1 terawat t t o9

about . 9 t er awat t , t hey ar e known and qual i f i ed RES. And10

t hey add up t o about - - wel l , act ual l y, mor e t han f our11

t er awat t s of RES qual i f i ed ener gy i n a l ow- l oad scenar i o.12

I t hi nk, actual l y, you f l ashed up j ust13

a f ew mi nut es bef or e t he l oad i n a l ow- l oad scenar i o, and14

t he r equi r ement s of RES i n a l ow l oad ar e l ess t han f our15

t er awat t s of ener gy annual l y.16

So agai n, goi ng back t o t he f act t hat17

we don’ t , i n f act , need t hi s ener gy t o be RES ener gy, i t18

i s an ener gy- onl y pr oduct i s act ual l y shown t hr ough t hi s,19

and I t hi nk el sewher e i n t he document i t act ual l y shows20

you t he l ow- l oad scenar i o and t he r equi r ement s f or RES f or21

t hat .22

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So you act ual l y don’ t have t o count1

ei t her t he New Br unswi ck i mport s or t he excess energy as2

RES compl i ant t o meet t he Nova Scot i a needs.3 MR. MacDONALD: Okay. J ust so I4

under st and, t hose ar e - - so they won’ t be consi der ed or5

t hey won’ t count t owards t he RES compl i ant quot a.6

MR. SIDEBOTTOM: They don’ t need t o7

count and, as an ener gy- onl y pr oduct whi ch i s bei ng8

of f ered t hr ough t he Energy Access Agr eement , we don’ t9

act ual l y need t hose credi t s.10

MR. MacDONALD: Okay. Thank you.11

Okay, same exhi bi t , page 15 - - 18,12

At t achment 1. So t hi s i s the t abl e - - t hi s i s f or t he13

base l oad - - yeah, wi nd base l oad. And i t ’ s showi ng t hat14

t he RES r equi r ement i s i n t he f our t h col umn over f r om t he15

l ef t . RES ener gy i n 2020 - - sorr y, RES r equi r ement i n16

gi gawat t hour s.17


MR. MacDONALD: Okay. And i t ’ s19

gr owi ng f r om 4, 123 gi gawat t hour s i n 2020 t o 4, 581 i n20

2040. So under t he - - l ooki ng at t hi s, and under t he21

t er ms of t he EAA, what makes you t hi nk that t her e i s st i l l22

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enough RES el i gi bl e ener gy t o meet t he RES r equi r ement ?1

MR. SIDEBOTTOM: So as we’ ve al r eady2

sai d, we t ook a l ook at t he t ot al deci si on and we3

under st ood t hat t he Boar d f el t t hat t he mor e l i kel y4

scenar i o was t he l ow- l oad scenar i o. And i n t hat5

par t i cul ar case, t he RES r equi r ement s are bel ow f our6

gi gawat t hour s and, t her ef or e, we ar e f ul l y compl i ant7

wi t hout havi ng t o have t he excess ener gy be RES qual i f i ed.8

Anot her i nt er est i ng not e, t hough, i n -9

- t hi s i s actual l y t he base- l oad scenar i o. You’ l l see10

t hat i t ’ s not much above t he 4 gi gawat t s even i n a base-11

l oad scenar i o, and so t he i ncr ement of RES r equi r ement s i s12

not t hat si gni f i cant , actual l y, t o achi eve t hat . And i f13

we saw t he l oad gr ow t owards t he base- l oad r equi r ement s,14

we’ d f i nd t he most economi c sol ut i on f or cust omer s at t hat15

t i me to acqui r e the appr opr i at e RES cr edi t s.16

MR. MacDONALD: Okay. Can we br i ng up17

- - wher e i s i t her e? I t ’ s f r om Mr . Raphal s’ s t est i mony.18

I t ’ s M- 142, page 19.19

Okay. So t hi s i s f r om hi s evi dence20

and showi ng t he anal ysi s of t he RES el i gi bl e ver sus21

r equi r ement s, agai n, on t he base- l oad case. So i f you’ r e22

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goi ng wi t h l ow l oad, wel l , j ust bear wi t h me as we go1

t hr ough t he base l oad, I guess.2

As you can see, t he dot t ed r ed l i ne3shows t he RES r equi r ement under t he base l oad, and the4

bl ue l i ne i s t he RES el i gi bl e r esour ces. And t hen t he5

dot t ed gr een l i ne shows t he percent age of r enewabl es al ong6

t he r i ght axi s.7

So r eal l y, what I ’ m - - what t hi s gr aph8

i s showi ng, t hat wi t h surpl us i mpor t s f r om bot h New9

Br unswi ck and Nal cor t r eat ed as non- el i gi bl e resour ces,10

t he per cent age of RES el i gi bl e resour ces r emai ns under 4011

percent f or each year f r om 2020 t o 2040.12

So agai n, does t hat go back t o your13

ear l i er comment about t he Nova Scot i a- New Br unswi ck coul d14

be RES compl i ant ?15

MR. SIDEBOTTOM: I t hi nk what I woul d16

t ake f r om t hi s i s that , f i r st , i f t he l oad gr ew t o t he17

base case, whi ch, agai n, we have t aken the l ead of t he18

Boar d on t he l ow l oad bei ng t he more pr obabl e case. But19

even at t hat case, I dr aw how cl ose i t i s wi t h si mpl y t he20

r enewabl es t hat ar e seen as avai l abl e t hr ough Nova Scot i a,21

as bei ng envi si oned and bui l t i n Nova Scot i a, and t he22

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Mar i t i me Li nk, and t hat we woul d onl y need t o br i dge a1

smal l gap i f t he l oad act ual l y di d appear as a l ow l oad or2

as t he base- l oad scenar i o.3

MR. MacDONALD: Thank you. Okay,4

movi ng t o the next t opi c.5

I t hi nk i t ’ s been br ought up bef or e,6

so I won’ t beat t hi s t o deat h. But I guess we’ r e j ust - -7

I t hi nk ever yone i s t r yi ng t o under st and, you know, what8

happens at t he end of t he cont r act ual per i od of t he EAA i f9

t he 1. 2 t erawat t average, you know, has not been met .10

So t her e’ s pr ovi si ons, you know, i n11

t he EAA about t hey shal l compensat e NSPI accor di ngl y, and12

I t hi nk i t was r ai sed ear l i er wi t h t he Smal l Busi ness13

Advocat e about some of t he wordi ng i n t he agr eement s.14

So i s t her e any - - wi l l t hat wor di ng15

be f i nal i zed i n t he f i nal agr eement ?16

MS. TOWER: So i t i s t he i nt ent i on of17

t he par t i es t o meet t he 1. 2 over t he per i od of t he t er m of18

t he 24 or 25 year s, and so we have not onl y t he i ni t i al19

commi t ment of Nal cor , but t he backst op of Emera and20

Nal cor . And so I ' m - - sor r y, your quest i on i s - - t he21

wor di ng - - -22

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MR. MacDONALD: Yeah. I guess I ’ m - - -1

MS. TOWER: Sor r y, maybe ask your2

quest i on agai n. I ’ m sor r y.3 MR. MacDONALD: Sur e. I ’ m j ust - - I ’ m4

get t i ng at - - t her e’ s wor di ng i n t her e t hat says i f ei t her5

Emer a or Nal cor f ai l s t o meet t hei r var i ance obl i gat i ons,6

“t hey shal l compensat e NSPI accor di ngl y. ”7

So I guess we’ r e j ust t r yi ng t o get8

at , you know, when wi l l t he def i ni t i on of "accor di ngl y" be9

devel oped?10

MR. SIDEBOTTOM: So t he i nt ent her e,11

of cour se, i s t o ensur e t hat Nova Scot i a cust omer s are12

kept whol e and t hat we woul d put suf f i ci ent l anguage i n13

t her e t o ensur e t hat i t was t hat exact i nt ent , exact14

cal cul at i on of t hat because that coul d be some t i me i n t he15

f ut ur e. May not be pr escr i bed, but t he pr i nci pl es at16

whi ch i t woul d be appl i ed I woul d expect woul d exi st i n17

t he cont r act .18

MS. TOWER: Ul t i mat el y, I t hi nk t hi s19

Boar d has over si ght over how t he ul t i mat e cal cul at i on, i f20

t her e was a def aul t , and t he par t i es had t o st ep up. I21

t hi nk the ul t i mat e t est woul d be t hi s Boar d’ s over si ght22

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over how Nova Scot i a Power ’ s cust omer s wer e compensat ed1

f or t hat .2

MR. MacDONALD: Thank you.3

Fi nal quest i on. I t ’ s f or - - I guess4

f or Mr . Si debot t om, who ref er enced i t ear l i er .5

You sai d bef or e t hat i f Nal cor ’ s f i r m6

l oad gr ows, i t wi l l have t o bui l d new r enewabl es whi ch7

wi l l i ncr ease t he avai l abl e sur pl us ener gy due t o t he8

di f f er ence bet ween aver age and f i r m ener gy f r om9

r enewabl es; cor r ect ?10

MR. SIDEBOTTOM: That sounds r i ght ,11

yes.12

MR. MacDONALD: So accor di ng t o your13

t est i mony, f or t he dur at i on of t he EAA, Nal cor coul d bui l d14

onl y r enewabl e energy r esour ces?15

MR. SIDEBOTTOM: That ’ s cer t ai nl y16

t hei r pl an, yes.17

MR. MacDONALD: Okay. Coul d we go18

back t o M- 142, page 23?19

So t hi s i s f r om t he Mani t oba Hydr o20

I nt er nat i onal r epor t . I t was pr epar ed f or t he21

Newf oundl and and Labr ador Publ i c Ut i l i t i es Boar d i n 2012.22

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Accor di ng t o t hi s char t , I bel i eve i t1

r epr esent ed Nal cor ’ s descr i pt i on of t he Muskrat Fal l s2

scenar i o. I t shows the next gener at i on r esour ce af t er3Por t l and Cr eek t o be a 170 megawat t combi ned cycl e4

combust i on t ur bi ne.5

Have I got t hat r i ght so f ar ?6

MR. SIDEBOTTOM: Yes, and t hat ’ s under7

a scenar i o of Newf oundl and not bei ng connect ed. That CCGT8

doesn’ t exi st i n t hei r r esour ce pl an i n a connect ed9

syst em.10

MR. MacDONALD: Okay. Does i t not at11

l east suggest t hat , at mi ni mum, t hat t hey’ r e open t o the12

i dea of t her mal ?13

MR. SIDEBOTTOM: I woul d say t hat i t14

i s j ust a r ecogni t i on of what t hei r syst em needs i f i t ’ s15

not connect ed.16

I n t hi s par t i cul ar scenar i o, t hey ar e17

not connected t o t he rest of Nort h Amer i ca and t hey have18

ot her needs.19

I n, I bel i eve, t he same r epor t , i n a20

connect ed syst em t hat uni t doesn’ t exi st .21

MR. DEVEAU: So Mr . Si debot t om, what22

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what t hey went t hr ough i n f r ont of t he Publ i c Ut i l i t i es1

Boar d r el at i ve t o Muskrat Fal l s. So I t hi nk you woul d be2

r i ght , i f t hat was t he l east cost opt i on f or t hem at a3poi nt i n t i me, t hey may consi der i t .4

What we know of Newf oundl and’ s out l ook5

f or t hei r act ual hydr o bui l ds, t he ones t hat ar e6

r epr esent ed on the t op l i ne, t he Por t l and Cr eek and t he7

ot her s t hat we t al ked about , Round Pond, I sl and Pond ar e8

t hr ee of t he pr oj ect s t hat t hey have.9

They’ ve t al ked about t he cost of10

br i ngi ng t hose onl i ne. I t hi nk t her e was act ual l y11

evi dence pr esent ed dur i ng t he hear i ng ear l i er t hi s year12

and what t hose ant i ci pat ed l evel i zed cost s are.13

They, i n our vi ew, woul d r emai n14

compet i t i ve. You know, unl ess somebody was get t i ng15

somet hi ng f or f r ee on a combust i on t ur bi ne, t hey’ d beat16

t hose cost s on a l ong- t er m l evel i zed.17


Sor r y, Mr . MacDonal d.19

MR. MacDONALD: I t hi nk t hat sor t of20

got t o t he quest i on, but I ’ l l j ust - - I ’ l l pose t he21

quest i on anyway.22

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So t o t he best of any of your1

knowl edge, are any of you aware of any f ormal commi t ment2

on t he part of Nal cor , Newf oundl and Hydr o or t he3

gover nment under whi ch i t r enounces t he possi bi l i t y of4

bui l di ng t her mal gener at i on i n t he f ut ur e?5

MS. TOWER: I don’ t t hi nk we coul d6

speak f or any of t hem. What we do know i s Mr . Humphr i es,7

when he was at t he techni cal conf erence, t al ked about what8

Newf oundl and and Labr ador ’ s pl ans were, and my9

r ecol l ect i on i s t hat t hat was - - he t al ked about f ut ur e10

pl ans of hydr o devel opment .11

So ot her t han t hat , I don’ t t hi nk we12

can r eal l y speak f or t he par t i es t hat you named.13

MR. MacDONALD: Thank you. That ’ s al l14

of my quest i ons.15

THE CHAIR: Thank you, Mr . MacDonal d.16

PC Caucus, any quest i ons?17

Wel come, Mr . d' Ent r emont . I t hi nk18

t hi s i s your f i r st appear ance her e i f I - - -19

MR. d'ENTREMONT: Thank you, Mr .20

Chai r . I t ’ s a pl easure t o be her e f or a f ew moment s, and21

I ’ l l t r y t o keep t hi s one as shor t as we can.22

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CROSS-EXAMINATON BY MR. d'ENTREMONT1

MR. d'ENTREMONT: We’ ve had a l ot of2

di scussi on and I know t hat t her e’ s been a l ot of t he - -3pr obabl y t he answer s t hat I pr obabl y have f r om pr evi ous4

pr esent at i ons, but t he quest i on ar ound l ow l oad and hi gh5

l oad and al l t hat st uf f .6

So i f t he l ow l oad has essent i al l y7

become t he base l oad, why hasn’ t t he EAA agr eement not8

been test ed acr oss, or has i t been test ed acr oss and we9

j ust haven’ t seen i t yet f or pot ent i al f ut ure l oads usi ng10

t hat pr oj ect i on as t he base i nst ead?11

MR. SIDEBOTTOM: So t he EAA act ual l y12

cont empl ates up t o 1. 8 t erawat t s of energy each year , and13

t hat i s made avai l abl e. I t ’ s a combi nat i on of , obvi ousl y,14

t he var i abl e hydr ol ogy al ong wi t h ener gy that ’ s not15

commi t t ed t o l oad i n Newf oundl and. So we act ual l y bel i eve16

t her e i s oppor t uni t y f or ener gy f r om t hat st andpoi nt .17

As wel l , we do have access t o economy18

ener gy thr ough New Br unswi ck, al t hough i t ’ s mor e l i mi t ed,19

but i t ’ s f aci l i t at ed by t he Mar i t i me Li nk i t sel f .20

And i f you can r ecal l back i n t he21

cases, we’ ve br ought i n about . 8 t er awat t s of ener gy22

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comi ng f r om New Br unswi ck or comi ng f r om ot her sour ces.1

MR. SIDEBOTTOM: Act ual l y, I ’ d2

di sagr ee wi t h you. And t he anal ysi s woul d show t hat3havi ng a second connect i on i s act ual l y t he best answer f or4

Nova Scot i a cust omers.5

Because you’ ve got t wo sour ces, we6

cr eat e a compet i t i ve market , we i nvi gor at e t he Mar i t i me7

market because you’ ve got a sour ce of energy f l owi ng8

t hr ough t hi s pr ovi nce, whi ch i nher ent l y i s goi ng t o9

provi de val ue t o cust omers beyond even what we’ ve model ed.10

MR. d'ENTREMONT: Okay. The r egi onal11

appl i cat i on envi si oned gr eenhouse gas cr edi t s appl yi ng t o12

both t he Nova Scot i a bl ock and t o t he sur pl us energy13

bl ock. The Ener gy Access Agr eement i s di f f er ent . I t14

st r i ps t he sur pl us ener gy, ot her gr eenhouse gas cr edi t s.15

So coul d you expl ai n t he di f f er ence16

bet ween t hose?17

MR. SIDEBOTTOM: Wel l , I t hi nk what we18

know i n t he l ow- l oad scenar i o i s you don’ t need t o have19

t he gr eenhouse gas cr edi t s t o act ual l y serve t he l oad i n20

t he l ow- l oad scenar i o, whi ch was seen t o be the most21

l i kel y scenar i o i nt o t he f ut ur e.22

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I t hi nk t he second poi nt i s t hat we1

woul d t hen, at t he t i me, i f t he l oad di d gr ow, be mor e2

t han advant aged by bei ng abl e t o access mul t i pl e market s3

f or sour ces of t hat gr een credi t at t hat t i me.4

MR. d'ENTREMONT: Okay. And I know5

you sor t of al r eady answered t hi s, but how can you say6

t hat r at epayer s ar en’ t di sadvant aged when t hey’ r e get t i ng7

surpl us ener gy wi t hout t hose gr eenhouse gas cr edi t s?8

MR. SIDEBOTTOM: I t hi nk i t ’ s as9

si mpl e as t hey’ r e not r equi r ed at t hi s poi nt , and so10

t her e’ s no need f or cust omer s t o pay f or i t .11

I t creat es t he l owest cost sol ut i on12

f or cust omer s and, t her ef or e, i t i s not a di sadvant age; i t13

i s t he advant age.14

MR. d'ENTREMONT: Okay. You cl ai m not15

t o need them f or Renewabl e Ener gy St andard based on t he16

l ow- l oad pr oj ect i on, but Nova Scot i a rat epayer s need t o be17

pr ot ect ed agai nst t he r ange of f ut ur e f or ecast s. I n t he18

event t hat f ut ur e demand exceeds t he l ow- l oad f or ecast s,19

how can you be sur e t hat Nova Scot i a rat epayer s - - t hat20

t he RES r equi r ement wi l l be met wi t h no addi t i onal cost t o21

t hem?22

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MR. SIDEBOTTOM: Wel l , what we do know1

i s t hat as l oad i ncr eased i n Nova Scot i a, havi ng a second2

connect i on to t he Mar i t i me Li nk showed ver y cl ear l y i t was3t he l owest - cost opt i on f or cust omer s.4

I t was onl y under t he l ow- l oad5

scenar i o t her e was t he quest i on of t hi s bei ng a cl ose6

r ace, as I bel i eve i t t o be seen, so what we' ve done i s7

we' ve ensur ed t he access t o t he energy that gi ves us8

conf i dence t hat t hi s i s t he l ow- l oad sol ut i on i n - - sor r y,9

t he r i ght sol ut i on i n a l ow- l oad case.10

MR. d’ENTREMONT: Okay. I n t he event11

t hat Emera i s cal l ed upon pr ovi di ng r enewabl e energy, what12

i s t he assurance t hat we have t hat i t wi l l not show up i n13

our r at e base?14

You have t o go and const r uct15

somet hi ng, by the sound of i t .16

MS. TOWER: So i f Emer a i s st eppi ng up17

t o i t s 300 GWh obl i gat i on, i t i s r equi r ed t o bi d i n at t he18

same cost s - - maxi mum cost s as out l i ned.19

And so as Mr . O' Connor sai d ear l i er ,20

t hose do not envi si on a gr een energy pr oduct or a gr een21

cr edi t . So we are under - - we, Emera, are under t he same22

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obl i gat i on as Nal cor and as i s out l i ned and we ar e bound1

by the agr eement t hat ' s i n f r ont of us.2

MR. d’ENTREMONT: Okay. And my f i nal3

quest i on, Mr . Chai r .4

The Board made t hei r deci si on on J ul y5

22nd. NSPML submi t t ed t hei r compl i ance f i l i ng on Oct ober6

21st .7

You' ve asked f or qui ck t urnaround8

wi t hout , you know, a whol e l ot of expl anat i on on t hat . We9

sor t of had a l ot of t i me t o pr epar e i t and a ver y shor t10

per i od of t i me t o r espond t o i t .11

So j ust when i t comes up t o t he i ssue,12

what i s t he r eal deadl i ne her e? How l ong do we have13

bef or e you need t o have t hat f i nal deci si on f r om t he14

Board?15

MS. TOWER: I woul d si mpl y say t hat we16

need i t as soon as t he Boar d can make i t .17

MR. d’ENTREMONT: Thank you.18

Those ar e al l my quest i ons, Mr . Chai r .19

THE CHAIR: I may come back t o t hat ,20

so st i ck ar ound.21

MR. d’ENTREMONT: Okay. That ' s an22

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i nt er est i ng one.1

THE CHAIR: Thank you ver y much.2

MR. d’ENTREMONT: Thank you.3THE CHAIR: Por t Hawkesbury Paper .4

NSDOE.5

MR. McGRATH: Yes. Thank you, Mr .6

Chai r .7

(SHORT PAUSE)8

CROSS-EXAMINATION BY MR. McGRATH9

MR. McGRATH: Good af t er noon, panel .10

MS. TOWER: Good af t ernoon.11

MR. McGRATH: Does NSPI cur r ent l y12

i mpor t ener gy thr ough annual sol i ci t at i ons?13

MR. SIDEBOTTOM: No, we don' t at t hi s14

poi nt .15

MR. McGRATH: So that aspect of t he16

EAA woul d be a new aspect of NSPI ' s pr ocur ement pr act i ces?17

MR. SIDEBOTTOM: New onl y i n term, but18

al l t he r est of t he char acter i st i cs woul d be ver y si mi l ar ,19

so i t ' s not unl i ke what we do t oday, j ust a l i t t l e bi t20

l onger .21

MR. McGRATH: And a l i t t l e bi t mor e,22

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as wel l ?1

MR. SIDEBOTTOM: Yes.2

MR. McGRATH: So you' r e l ooki ng at ,3

under t he EAA, ener gy t hat ' s appr oxi mat el y, I t hi nk, 104

percent of your annual energy requi r ement s?5

MR. SIDEBOTTOM: I t coul d be as hi gh6

as t hat , yes.7

MR. McGRATH: And now, when8

under t aki ng t hese annual sol i ci t at i ons, wi l l NSPI st r i ve9

t o do so i n a manner t hat f ost er s as compet i t i ve a mar ket10

as possi bl e?11

MR. SIDEBOTTOM: Absol ut el y. You12

know, i f we dr aw a compar i son to today, we negot i ate RFPs13

out f or mul t i pl e year s of ener gy sour ce suppl i es. I t may14

not be el ect r i ci t y t oday.15

We do t hi s f or nat ur al gas and coal ,16

and t hose sol i ci t at i ons can al so repr esent upwar ds of 1017

per cent of a par t i cul ar year ' s ener gy r equi r ement s as18

wel l .19

MR. McGRATH: And you' l l al so, when20

you go out f or t hese annual sol i ci t at i ons, seek t o21

el i mi nat e as much r i sk as possi bl e t o Nova Scot i a22

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r atepayers i n t he manner i n whi ch you conduct t hese1

pr ocur ement pr ocesses?2

MR. SIDEBOTTOM: Yes, we wi l l . We' l l3seek t o st r uctur e i t f or t he t ot al best val ue f or4

cust omer s, i ncl udi ng t he r i ght r i sk pr of i l e.5

MR. McGRATH: And t he manner i n whi ch6

NSPI undert akes i t s procur ement t hr ough t hese annual7

sol i ci t at i ons i s f ul l y r evi ewabl e by t he Boar d?8

MR. SIDEBOTTOM: I t i s. Ther e' s a FAM9

audi t ever y second year , and al l our t r ansact i ons and10

deci si ons ar e f ul l y scr ut i ni zed and t r anspar ent l y11

avai l abl e to the Boar d and i nt er venor s.12

MR. McGRATH: And am I cor r ect t hat13

NSPI cur r ent l y has a document t hat det ai l s i t s pol i ci es14

and pr ocedur es f or pr ocur i ng f uel f or gener at i ons?15

MR. SIDEBOTTOM: I t does.16

MR. McGRATH: And t he name of t hat17

document i s?18

MR. SIDEBOTTOM: The Fuel Manual .19

MR. McGRATH: Does NSPI have a si mi l ar20

document wi t h pol i ci es and pr ocedur es f or i t s power21

pur chase act i vi t i es?22

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MR. SIDEBOTTOM: Power pur chase1

act i vi t i es are act ual l y encompassed i n t he Fuel Manual2

t oday.3

MR. McGRATH: And i n t er ms of t he Fuel4

Manual i t sel f , am I cor r ect t hat t hat was - - i ni t i al l y5

came t o be or came i nt o exi st ence as a response t o coal6

pr ocur ement i ssues t hat wer e rai sed i n past Boar d7

deci si ons?8

MR. SIDEBOTTOM: I t was devel oped9

based on concer ns of t he Boar d and st akehol ders, and i t10

was cr eat ed wi t h si gni f i cant amount of i nput and r evi ewed11

by st akehol ders and t he Boar d and Boar d consul t ant s.12

MR. McGRATH: I n l i ght of t he change13

i n NSPI ' s ant i ci pat ed pr act i ces i n pr ocur i ng power , bot h14

i n t er ms of t he l engt h of t he cont r act and t he vol umes of15

ener gy that you' l l be deal i ng wi t h, woul d you agr ee t hat16

i t woul d be pr udent t o revi ew t hose pol i ci es and17

pr ocedures t o make sur e that t hey ar e r obust enough t o18

accommodate t he act i vi t i es t hat you envi si on under t he EAA19

i n or der t o f ost er as compet i t i ve a mar ket as possi bl e?20

MR. SIDEBOTTOM: I n f act , t he f uel21

manual goes t hr ough a f ai r l y cont i nuous r evi ew pr ocess,22

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and t here i s engagement t hr ough what ' s cal l ed t he FAM1

Smal l Worki ng Gr oup i n whi ch we endeavour t o keep2

i nt er est ed st akehol der s abr east of t he evol vi ng mar ket ,3whet her i t be el ect r i ci t y, nat ur al gas, coal , or any ot her4

pr oduct we' r e pur chasi ng t o gener at e el ect r i ci t y.5

MR. McGRATH: Bef ore NSPI begi ns6

acqui r i ng ener gy under t he EAA, i f t he Boar d appr oves t he7

ar r angement , woul d NSPI commi t t o speci f i cal l y engagi ng8

t he FAM Wor ki ng Gr oup t o conduct a speci f i c r evi ew t o9

determi ne whether any pol i ci es and pr ocedur es need t o be10

changed t o accommodat e t hat ant i ci pat ed act i vi t y?11

MR. SIDEBOTTOM: Of cour se.12

MR. McGRATH: And i n t erms of t he13

sol i ci t at i on pr ocess, I j ust want t o make sur e how i t ' s14

cont empl ated i t woul d work under t he EAA.15

As I under st and i t , i t appear s t o be16

f ai r l y f l exi bl e i n t hat NSPI i s f r ee t o i ssue a17

compet i t i ve sol i ci t at i on on any t er ms t hat i t pl eases,18

mor e or l ess. I s t hat f ai r l y accur at e?19

MR. SIDEBOTTOM: That ' s cor r ect , yes.20

MR. McGRATH: And i s i t f l exi bl e21

enough t o, f or exampl e, deal wi t h t he si t uat i on wher e i f22

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NSPI went t o mar ket and f i ve bi dder s put pr i ces i n t o NSPI1

i n r esponse t o t he sol i ci t at i on t hat NSPI coul d accept2

par t s of t he bi ds f r om al l f i ve of t hose bi dder s f or par t3

of t he year t hat i t ' s l ooki ng f or and maybe even none f or4

ot her par t s of t he year ?5

MR. SIDEBOTTOM: Yes, i t i s.6

MR. McGRATH: And i f NSPI accept s7

bi ds, whet her f r om Nal cor or a t hi r d par t y, i t woul d be8

obl i ged t o take t hat ener gy?9


MR. McGRATH: And t he bi d pr i ces are11

l i kel y goi ng t o be t i ed t o an i ndex?12


MR. McGRATH: And so i t may come t o14

pass, t her ef or e, t hat by t he t i me t he ener gy i s del i ver ed,15

t he pr i ce f or t he ener gy wi l l be hi gher t han ant i ci pat ed16

when t he bi d was accept ed?17

MR. SIDEBOTTOM: Yes, but because we18

ar e i dent i f yi ng l i qui d t r adi ng hubs, i f we want t o hedge19

t he pr i ce, we have t he abi l i t y t o do t hat , so based on 20

r i sk management pr act i ces and how much of t he por t f ol i o we21

want ed t o i n f act , l ock i n a pr i ce t hat ef f ect i vel y can22

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f i x t he pr i ce bef or e t he ener gy i s del i ver ed. Al t hough1

you' ve got one par t of t he cont r act t hat i s i ndexed, t he2

end ef f ect f or cust omer s i s t hat i t ' s a f i xed pr i ce.3 MR. McGRATH: And i n t erms of t he4

pot ent i al f or hedgi ng t he pr i ces f or economy ener gy, i s5

t hat cur r ent l y addr essed i n t he pol i ci es and pr ocedur es6

t hat you have?7


MR. McGRATH: And t hat wi l l be par t of9

t he r evi ew t hat you i ndi cated t o me t hat you' d be pr epared10

t o t ake a l ook at a moment ago, t o see whet her t hose11

hedgi ng pr act i ces are r obust enough t o accommodate your12

new act i vi t i es under t he EAA?13

MR. SIDEBOTTOM: Yes, we' r e al ways t o14

open t o underst andi ng how cust omers woul d l i ke t he r i sk15

pr of i l e addr essed on buyi ng ener gy.16

MR. McGRATH: I f NSPI i s bei ng17

del i ver ed energy, ei t her hedged or unhedged, under t he18

t er ms of t he RFP r esponse that i s mor e cost l y t han i t19

expect s, and i n f act , mor e cost l y t han i t cost s NSPI t o20

sel f - gener at e at t hat t i me, how wi l l NSPI mi t i gat e t hat21

i mpact on r atepayers?22

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MR. SIDEBOTTOM: So we al ways have t he1

abi l i t y t o sel l ener gy i nt o t he mar ket . So i f t he mar ket2

i s at a pr emi um, so, l i ke, l et ' s bui l d out t hat scenar i o,3

t hen as an oppor t uni t y f or Nova Scot i a Power t o sel l i nt o4

t hat same mar ket and ef f ect i vel y r educe t hat r i sk by5

sel l i ng ener gy i nt o that mar ket , so we woul d have l ower6

cost ener gy t hat we coul d ef f ect i vel y cr eat e a pr of i t wi t h7

whi ch woul d of f set t hat cost .8

MR. McGRATH: And you say you' d al ways9

be abl e t o sel l ener gy i n t he mar ket . Ar e t her e any10

const r ai nt s on your abi l i t y t o sel l at any gi ven poi nt i n11

t i me?12

MR. SIDEBOTTOM: From t i me t o t i me13

t her e can be a t r ansmi ssi on const r ai nt , but my exper i ence14

has been get t i ng i n to t he New Engl and market , and15

especi al l y t he New Br unswi ck mar ket , has not r eal l y16

of f er ed much r estr i ct i on at al l . I t ' s t ypi cal l y t he17

i nbound f l ow t hat has been mor e t he r est r i ct i on.18

MR. McGRATH: Any ot her const r ai nt s?19

MR. SIDEBOTTOM: I suppose - - sor r y; I20

don' t under st and t he quest i on. On t he t r ansmi ssi on21

syst em?22

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MR. McGRATH: On your - - anythi ng el se1

t hat mi ght const r ai n your abi l i t y t o sel l ener gy i nt o t he2

market at any gi ven poi nt i n t i me i f you r ecei ve mar ket3ener gy f r om Nal cor t hat ' s - - t hat cost s t oo much?4

MR. SIDEBOTTOM: I see.5

So we ar e const r ai ned f r om r esel l i ng6

Nal cor ener gy subj ect t o l oad change or gener at i on change,7

but as I sai d, Nova Scot i a Power has a por t f ol i o of8

generat i on so any number of other generat i ng megawat t s can9

pr oduce t he out bound sal e whi ch, ef f ect i vel y, i s l i ke10

sel l i ng ener gy on.11

MR. McGRATH: Woul d t her e be t he12

pot ent i al t hat envi r onment al r est r i ct i ons woul d l i mi t your13

abi l i t y t o gener at e, t o sel l ener gy at any gi ven poi nt i n14

t i me?15

MR. SIDEBOTTOM: I guess pot ent i al l y,16

you' d have t o be at t he upper bounds of a par t i cul ar17

const r ai nt , but t hat woul d cer t ai nl y be consi der ed i n how18

we do t he r esal e. But t hat doesn' t st op us act ual l y19

consi der i ng t hat r esal e; we' l l j ust f actor t hat i n.20

MR. McGRATH: I n t er ms of t he21

al t er nat e mar ket pr i ce ar r angement - - sorr y.22

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I n t er ms of t he al t er nat e mar ket pr i ce1

ar r angement t hat ' s i n t he EAA, I j ust want t o make sure2

t hat I under st and i t cor r ect l y. So i f we can pul l t hat3

document up, Exhi bi t M- 134, and we' r e l ooki ng i n4

par t i cul ar at Secti on 4( c).5

(SHORT PAUSE) 6

MR. McGRATH: I won' t r ead t he whol e7

t hi ng, but I want t o f ocus on t he mi ddl e par t of t hat t hat8

says:9

10

“. . . t o t he ext ent Nal cor can11

demonst r at e bot h l i qui d t r adi ng12

node [ and] associ at ed publ i shed13

f or war d pr i ci ng i n an act ual14

t r ansmi ssi on pat h. . . ”15

16

I t ' s t he, “t o ext ent ” l anguage t hat I17

want t o f ocus on.18

You' d i ndi cat ed ear l i er i n t est i mony19

t hat t hi s al t er nat i ve oppor t uni t y i s somet hi ng t hat Nal cor20

woul d have t o i dent i f y at t he t i me i t bi ds?21

MR. O'CONNOR: That ' s cor r ect, yes.22

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MR. McGRATH: And i f i t i dent i f i es1

t hat i t has an oppor t uni t y wher e i t can achi eve a bet t er2

pr i ce on one day of t he ent i r e cont r act year , ei t her at3t he begi nni ng or at t he end, i t doesn' t r eal l y mat t er , i s4

i t ' s al t er nat i ve pr i ce appl i cabl e onl y t o t hat one day, or5

woul d i t appl y t o t he ent i r e year under t he cont r act ?6

MR. O'CONNOR: I t ' s onl y appl i cabl e t o7

t he vol ume t hat coul d f l ow on that one day.8

MR. McGRATH: Thank you.9

And Mr . O' Connor , you' d t est i f i ed10

ear l i er i n r esponse t o quest i ons t oday i n r espect of t he11

abi l i t y t o have a pr emi um mar ket t hat ' s bui l t on gr een12

at t r i but es or a gr een pr emi um as set t i ng an al t er nat i ve13

pr i ce, and I t hi nk you' d i ndi cat ed - - I don' t have t he14

exact wor ds, so i f I ' m mi schar act er i zi ng i t l et me know,15

but t hat you vi ewed t he l anguage “al t er nat i ve spot - market16

oppor t uni t i es” as pr ecl udi ng t hat because spot mar ket17

r ul ed out anyt hi ng other t han an economy ener gy wi t h no18

at t r i but es. 19

MR. O'CONNOR: Yes, that ' s cor r ect .20

And what we' r e buyi ng i s onl y ener gy, i t ' s not capaci t y or21

ot her envi r onment al at t r i but es, so t hose two condi t i ons22

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woul d pr ecl ude t he envi r onment al at t r i but es bei ng i n t hi s1

pr i ci ng.2

MR. McGRATH: Sor r y; what was t he3

ot her condi t i on?4

MR. O'CONNOR: That t he act ual pr oduct5

we' r e buyi ng i s ener gy onl y, as def i ned i n t he cont r act .6

MR. McGRATH: Okay.7

(SHORT PAUSE) 8

MR. McGRATH: Dur i ng t he cour se of t he9

agr eement wi t h Nal cor , i f NSPI det er mi nes t hat i t ' s mor e10

economi c at any poi nt i n t i me t o sel f - gener at e by bui l di ng11

addi t i onal wi nd gener at i on r at her t han acqui r i ng mar ket12

ener gy f r om Nal cor , i s i t st i l l at l i ber t y t o do t hat ?13


MR. McGRATH: And i f i t does, woul d15

Nal cor st i l l be obl i ged t o r espond t o annual sol i ci t at i ons16

t o det er mi ne whet her t her e may not st i l l be l ow pr i ce17

per i ods when acqui r i ng mar ket ener gy mi ght st i l l be18

appr opr i at e?19

MR. SIDEBOTTOM: They ar e.20

MR. McGRATH: And so mai nt ai ni ng21

Nal cor on t he hook wi t h r espect t o t hi s i s a benef i t t o22

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r at epayer s?1


MR. McGRATH: Now, i n t he si t uat i on3wher e Nal cor f or what ever r eason i sn' t abl e t o pr ovi de t he4

aver age 1. 2 t er awat t hour s over t he cour se of t he5

cont r act , and Emer a and Nal cor have t o st ep i n to pr ovi de6

t he var i ance amount s, as I under st and i t t her e' s an opt i on7

wher e i f NSPI di d t hat exact same t hi ng because i t was8

mor e benef i ci al t o bui l d a wi nd f ar m t o pr ovi de t he9

ener gy, t hat Emer a woul d t hen be r el i eved of i t s10

obl i gat i on t o pr ovi de t he var i ance amount of ener gy - - i t s11

var i ance amount t o t he extent t hat t he wi nd f ar m was12

pr oduci ng up t o t he 300 gi gawat t hour s.13

MR. SIDEBOTTOM: That woul d onl y be14

t he case i f - - and, agai n, i t ' s an opt i on f or Nova Scot i a15

t o choose i t as a l ow cost opt i on - - at t hat poi nt i t ' s a16

bet t er sol ut i on f or cust omer s and t hat sat i sf i es t hat 30017

gi gawat t s of t he var i ance.18

MR. McGRATH: Ri ght . But i t ' s a19

bet t er sol ut i on because i t ' s mor e cost ef f ect i ve t o bui l d20

wi nd i n t hat scenar i o; cor r ect ?21

MR. SIDEBOTTOM: Yes, as you' ve22

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pr oposed i t , yes.1

MR. McGRATH: Ri ght . And when t her e' s2

no var i ance amount and i t ' s Nal cor , and NSPI bui l ds wi nd3

because i t ' s mor e cost ef f ect i ve, Nal cor r emai ns commi t t ed4

t o i t s obl i gat i on t o bi d i n i t s commi t ment t o t he 1. 25

t erawat t hours, why t hen woul dn' t you keep Emera on the6

hook f or t he var i ance amount when i n si mi l ar ci r cumst ances7

you' r e bui l di ng a wi nd f ar m, because, agai n, i t ' s cost8

ef f ect i ve?9

(SHORT PAUSE) 10

MR. SIDEBOTTOM : Can you - - sor r y, can11

you r est at e t hat ?12

MR. McGRATH: Let me t r y t o come at i t13

a di f f er ent way. I f NSPI bui l ds wi nd gener at i on because14

i t ' s cost ef f ect i ve f or i t s own r easons, and we happen t o15

be i n a var i ance si t uat i on, why shoul d Emer a be l et of f16

t he hook?17

MR. SIDEBOTTOM : The r eason f or t hat18

i s t hat t her e' s a cheaper sol ut i on f or cust omer s because19

Nova Scot i a Power , f or what ever r eason at t hat t i me,20

ei t her i t s cost of capi t al or i t s posi t i on, i s abl e t o21

pr esent a l ower cost t o cust omer s.22

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MR. McGRATH: So i f we' r e not i n a1

var i ance si t uat i on t hough, we' r e j ust deal i ng wi t h Nal cor2

under i t s 1. 2 t er awat t hour commi t ment , i t ' s t he same3cheaper al t er nat i ve f or NSPI t hat i t t akes advant age of ,4

but i t doesn' t r el i eve Nal cor f r om i t s obl i gat i on. So5

what i s di f f er ent i n t hat scenar i o f r om t he var i ance6

amount scenar i o wher e Nal cor i s kept on t he hook but Emera7

i sn' t ?8

MR. SIDEBOTTOM : So I t hi nk I now9

under st and your quest i on. So t her e i s no var i ance and10

Nova Scot i a Power det er mi nes t hat i t ' s - - i t ' s cheaper t o11

bui l d a wi nd f ar m. And i n f act , i n t hat par t i cul ar case12

wi t h no t r i gger event , as i t ' s cal l ed i n t he agr eement ,13

Emer a i s not of f t he hook. They ar e st i l l on t he hook i n14

t hat par t i cul ar case.15

MR. McGRATH: So not worr i ed about16

Emer a i n t hat case. I t ' s Nal cor who' s not bei ng l et of f17

t he hook i n t hat case ei t her . They st i l l have t o bi d i n18

t o t he f ul l amount of t hei r 1. 2 t er awat t hour obl i gat i on;19

correct?20

MR. SIDEBOTTOM : Yes. And I t hi nk21

your quest i on went t o why i s Emer a bei ng l et of f t he hook.22

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And I bel i eve i f t her e' s no var i ance, t hen t her e' s no1

t r i gger event . And, t her ef or e, i f Nova Scot i a Power j ust2

i n i t s nor mal cour se of busi ness deci des t hat bui l di ng a3

wi nd f ar m i s a bet t er sol ut i on t han f aci ng a mar ket - pr i ce4

ener gy, f or what ever r eason, t hey ar e st i l l bot h obl i gat ed5

t o st and behi nd t hei r commi t ment , because t he commi t ment6

has not been di mi ni shed.7

MR. McGRATH: Okay.8

Go ahead, Ms. Tower .9

MS. TOWER : Yeah. So i t has t o do10

act ual l y wi t h t he f act t hat i n t he f i r st i nst ance Emer a11

doesn' t have any gener at i on and, secondl y, t he bal anci ng.12

So i n a si t uat i on wher e Nova Scot i a13

Power has t aken the opt i on and i s usi ng t he bal anci ng14

ser vi ce, t hen Nova - - t hen Emer a can' t use t hat wi nd15

opt i on and use the bal anci ng servi ce, because t her e' s onl y16

one. So i t was cont empl at ed t hat t hat was t he case.17

And si nce Emera doesn' t have18

gener at i on i n - - of i t s own, t hen t he bal anci ng ser vi ce19

woul d be t aken up and i t woul d be ver y di f f i cul t i n t hat20

i nst ance f or Emera t o bui l d wi nd, dependi ng on what was on21

t he syst em her e, t o sat i sf y i t s 300 GWh commi t ment .22

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MR. McGRATH: So as I - - i f I1

under st and you cor r ect l y, Emer a i s bei ng l et of f t he hook2

because NSPI i s t aki ng t he bal anci ng oppor t uni t y that3Emera woul d other wi se have wi t h Nal cor ?4

(SHORT PAUSE) 5

MS. TOWER : So t hat i s t he si t uat i on,6

t hat t her e i s onl y one oppor t uni t y f or bal anci ng because7

i t does t i e up capaci t y on t he Li nk. So t o t he ext ent8

you' r e usi ng t he Li nk f or bal anci ng, you' r e not abl e t o9

use i t f or ener gy t r ansmi ssi on, separ at e and apar t f r om10

t hat .11

So i n t he si t uat i on wher e Nova Scot i a12

Power deci des and t he Boar d appr oves t he f act t hat t o - -13

t o sat i sf y par t of t he obl i gat i on, Nova Scot i a Power14

bui l di ng wi nd and usi ng t hat bal anci ng servi ce, t hen Emer a15

woul d be r el i eved of i t s obl i gat i on because i t doesn' t16

t hen have access t o t he bal anci ng ser vi ce whi ch woul d hel p17

i t f ul f i l l i t s obl i gat i on.18

MR. McGRATH: So NSPI wi l l st i l l be19

payi ng f or t he bal anci ng ser vi ce?20

MS. TOWER : No. So i f - - i n t hat21

i nst ance, i f Emer a bui l ds wi nd and uses t he bal anci ng22

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ser vi ce, i t ' s at Emer a' s r i sk. I t has t o bi d i n - - i t has1

t o cont i nue t o bi d i n at t he pr i ces at out l i ned i n t he2

agr eement .3

So - - and t o the ext ent t hat Emera has4

bui l t wi nd and i s usi ng t he bal anci ng servi ce and payi ng5

f or i t and Nova Scot i a Power deci des t hey don' t want any6

energy t hat year , t hen Nova Scot i a - - t hen Emera woul d be7

on t he hood f or t he cost of t he wi nd wi t h no - -8

pot ent i al l y no sal e f or i t .9

MR. McGRATH: So t he scenar i o t hat10

we' r e di scussi ng i s wher e NSPI bui l ds t he wi nd gener at i on11

and Emera gets l et of f t he hook. And so Emera - - NSPI i n12

t hat case woul d be payi ng f or t he bal anci ng servi ces?13

MS. TOWER : But onl y because t hat14

woul d be a bet t er opt i on f or cust omer s. I t woul d be a15

l ess expensi ve opt i on. And, agai n, I woul d go back t o and16

appr oved by t hi s Boar d.17

MR. McGRATH: And i t ' s not payi ng any18

mor e t han Emera woul d pay i f Emera was t aki ng advant age of19

t he bal anci ng ser vi ces; i t ' s t he same pr i ce?20

MR. SIDEBOTTOM : Same pr i ce.21

MR. McGRATH: And so has t her e been22

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any assessment of t he val ue of havi ng access t o t hat1

bal anci ng ar r angement i n exchange f or l et t i ng Emer a of f2

t he hook?34

MR. SIDEBOTTOM : Agai n, I - - I ' l l t ake5

t he f i r st par t of t he quest i on, t he assessment of t he6

bal anci ng ser vi ce. So we have - - have done a number of7

cal cul at i ons of t he cost of i nt egr at i ng wi nd and I t hi nk8

t hey wer e act ual l y pr esent ed as some of t he f ol l ow on i n9

t he l ast hear i ng.10

Thi s bal anci ng ser vi ce woul d equate t o11

about a 25 t o $30 megawat t hour cost . As we see i n Nova12

Scot i a goi ng f or war d, t he pot ent i al cost of bal anci ng wi nd13

or i nt egr at i ng wi nd coul d be as hi gh as $60. So i t14

r epr esent s about 50 per cent of t he cost of what i t woul d15

- - mi ght ot her wi se be wi t h ot her - - ot her sour ces. So i t16

was a val uabl e pr oduct on t hat f r ont .17

MR. JANEGA : I t hi nk, Mr . McGr at h,18

t her e' s an i mpor t ant di st i nct i on, t hough. You keep19

r ef er r i ng t o Emer a and bei ng r el i eved of i t s posi t i on.20

I t ' s - - Nova Scot i a Power has an opt i on.21

I f i t want s t o l eave Emer a wi t h t he22

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obl i gat i on t o ser ve at t he mar ket pr i ces, i t ' s compl et el y1

wi t hi n Nova Scot i a Power ' s cont r ol , whi ch woul d be wi t h - -2

i n f r ont of t he UARB; woul d be compl et el y t r anspar ent and3

vi si bl e t hat t hey had a bet t er al t er nat i ve or not . So4

i t ' s onl y by t he choi ce of NSP cr eat i ng a l ower - cost5

ci r cumst ance f or t he cust omer t hat Emer a can' t serve t hat6

l oad.7

MR. McGRATH: So I guess my concer n8

t hough, Mr . J anega, i s i f i t ' s actual l y mor e cost9

ef f ect i ve at t hat poi nt i n t i me f or Nova Scot i a Power t o10

bui l d wi nd gener at i on t o f ul f i l l a need t hat i t sees, t hi s11

agr eement , i n a var i ant si t uat i on, cont empl at es t hat Emer a12

woul d be r el i eved t o t he extent t hat t he wi nd f ar m or t he13

wi nd gener at i on i s pr oduci ng ener gy f r om pr ovi di ng t hat14

ener gy as par t of t he var i ance amount . I ' m wonder i ng why15

t hat woul d be the case.16

MR. SIDEBOTTOM : F r o m - - -17

THE CHAIR : Bef or e you answer t hat18

quest i on, t her e' s no r est r i ct i on on wher e Emer a can get19

t hi s power , i s ther e? I t doesn' t have t o be f r om a20

wi ndmi l l ? Wi t h t hat caveat , can you answer t he quest i on?21

MR. SIDEBOTTOM : So I t hi nk - - t he way22

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I l ooked at t hi s i s, t her e' s an oppor t uni t y f or Nova1

Scot i a Power t o bet t er i t s posi t i on by avai l i ng i t sel f of2

a combi nat i on of a uni que bal anci ng pr oduct combi ned wi t h3t he bui l d of a wi nd f ar m. And i f t hat yi el ded a l ower4

cost , we want t o st ep i nt o t hat , because i t ' s t he bet t er5

sol ut i on f or our cust omer s.6

And agai n, as was sai d by Ms. Tower ,7

once you' ve got t he bal anci ng associ at ed wi t h t hat as8

wel l , t hey ar e ki nd of a par t and par cel of t hi s. And so9

Nal cor i s st eppi ng i n t o assi st i n t he backst op of t hi s10

f i r st 300 by f aci l i t at i ng a wi nd f ar m. Ther e' s t wo par t s11

of t hi s backst op. Emer a wi nd wi t h a Nova Scot i a opt i on t o12

t ake t he pl ace i f i t ' s l ow cost , f aci l i t at ed by t he13

bal anci ng ser vi ces f r om Nal cor .14

MR. McGRATH: And under t he Bal anci ng15

Ser vi ces Agr eement , Nal cor i s not r el i eved of i t s16

obl i gat i on t o pr ovi de any var i ance amount i f i t ' s subj ect17

t o t hat r equi r ement at t he t i me?18

MR. SIDEBOTTOM: That ' s cor r ect . So19

t hei r component of t he var i ance cont i nues on.20

MR. McGRATH: Ri ght . And so i t ' s onl y21

Emer a whose obl i gat i on i s r el i eved. And I ' m j ust22

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wonder i ng why.1

MR. SIDEBOTTOM : I t hi nk i t ' s s i mpl y2

an opt i on f or Nova Scot i a cust omer s wher e i t ' s mor e3

benef i ci al f or Nova Scot i a t o act ual l y pr ovi de a bet t er4

sol ut i on. And because t he bal ance - - -5

THE CHAIR : Wel l , why can' t t hey get6

t hat and the 300 megawat t cont i nui ng obl i gat i on?7

MR. JANEGA : Per haps i f I coul d, Mr .8

Chai r . I n t he f i r st pl ace, t he 300 i s creat ed. Emer a i s9

not a part y, does not own any of t he generat i on at Muskr at10

Fal l s, nor Newf oundl and and Labr ador .11

So the obl i gat i on on Emera i s because12

of t he case wher e Nal cor may not be abl e t o sat i sf y t he13

r equi r ement s. So i t ' s not a backi ng out of a r equi r ement14

because of an NSP opt i on. I t ' s act ual l y t hat Emer a i s15

st eppi ng i n t o ensur e t hat Nal cor ' s 1. 2 can act ual l y be16

at t ai ned, even t hey ar en' t abl e t o achi eve t hat .17

THE CHAIR: I under st and t hat poi nt .18

And t he quest i on i s, why ar e t hey bei ng r el i eved of t hat19

obl i gat i on?20

MS. TOWER: I t hi nk i t real l y has to21

do wi t h t he bal anci ng and t he f act t hat t her e i s r eal l y22

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onl y one oppor t uni t y t o get t hat bal anci ng servi ce. And1

whi l e t her e i s an oppor t uni t y t o, as you say, i mpor t2

ener gy, we don' t own t he t r ansmi ssi on.3We don' t have t r ansmi ss i on paths and4

we don' t - - we' r e t he onl y par t y i n t hi s agr eement wi t hout5

t r ansmi ssi on pat h access or ener gy, f or t hat mat t er . And6

so as par t of our st eppi ng up f or t he 300 GWh, t o7

f aci l i t at e t hat , t her e was a negot i at i on of t he bal anci ng8

ser vi ce wi t h Nal cor , but of f er ed i n t he f i r st i nst ance t o9

Nova Scot i a Power shoul d t hat be the best opt i on.10

THE CHAIR: But t he bal anci ng onl y11

r el at es t o i f somebody suppl i es i t wi t h a wi ndmi l l ,12

doesn' t i t ?13

MS. TOWER: That ' s cor r ect .14

THE CHAIR: Sur e. So i f you suppl y i t15

wi t h nat ur al gas or Emera does or somet hi ng el se, t he16

bal anci ng i s ni ce t o have, but not necessar y.17

MS. TOWER: That woul d be cor r ect .18

THE CHAIR: So why ar e they r el i eved?19

MS. TOWER: So i n an - - sor r y; i n an20

i nst ance when we' r e suppl yi ng i t some ot her way, we woul d21

not be r el i eved.22

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t hat equi val ent val ue, I t hi nk you i ndi cat ed t hat t hat ' s1

somet hi ng t hat ' s f ai r l y si mpl e t o do?2

MR. SIDEBOTTOM: For t he peopl e i n t he3energy depart ment , yes.4

MR. McGRATH: Woul d NSPI be prepar ed5

t o commi t t o pr ovi di ng r egul ar r epor t s t o t he Boar d on t he6

oper at i on of t he i nt er r upt i on and r edel i ver y pr ovi si ons t o7

sat i sf y Nova Scot i a r at epayer s t hat t hey ar e get t i ng t he8

same economi c val ue f or t he energy?9

MR. SIDEBOTTOM: Absol ut el y yes. I10

t hi nk t her e are some mechani sms i n pl ace now. There' s FAM11

quar t er l y repor t s, even mont hl y repor t s, and of cour se,12

t her e' s t he FAM audi t . So t here are many ways i n whi ch we13

can pr ovi de t hat updat e.14

MR. McGRATH: There ar e - - woul d t hi s15

be par t i cul ar l y conf i dent i al ?16

I know t he FAM di scussi ons are qui t e17

conf i dent i al . I ' m hopi ng t o get somet hi ng t hat mi ght be a18

l i t t l e bi t mor e t r anspar ent .19

MR. SIDEBOTTOM: To t he ext ent t hat20

t he i nf or mat i on doesn' t har m t he compet i t i veness and t he21

over al l val ue f or cust omer s, we' d endeavour t o make i t22

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avai l abl e.1

MR. McGRATH: Okay. Thank you.2

THE CHAIR: Mr . McGr at h, when you get3

t o a conveni ent poi nt , we' r e goi ng t o - - or i f you want t o4

car r y on f or 10 mor e mi nut es, t hat ' s f i ne, t oo.5

MR. McGRATH: I may be abl e t o f i ni sh6

i n about 10 mi nut es, Mr . Chai r .7

I ' d l i ke t o move i nt o t he agr eement ,8

Sect i on 6( a) , pl ease.9

You' ve had some di scussi on about t hi s10

pr ovi si on ear l i er t oday, and t hat ' s t he one t hat11

est abl i shes t he 1. 2 t erawat t hour commi t ment on t he part12

of Nal cor . And i t ' s not ed t hat i t ' s subj ect t o f or ce13

maj eur e event s.14

And you' ve had some di scussi on as wel l15

about t he def i ni t i on of f or ce maj eur e, and I j ust want t o16

t ouch upon t hat agai n j ust ver y br i ef l y.17

Force maj eur e i s used i n a number of18

di f f er ent pl aces i n t he document . I t ' s used wi t h r espect19

t o t he 1. 2 t er awat t hour commi t ment . I t ' s al so used as a20

f eat ur e of a f or gi vabl e event .21

I s i t i nt ended t hat f or ce maj eur e has22

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Ther e' s no r est r i ct i ons t here i n t er ms1

of t ype of l oad, and I ' m wonder i ng about i nt er r upt i bl e2

l oad. Do you know i f Newf oundl and and Labr ador has any3

si zabl e amount of i nt er r upt i bl e l oad?4

MS. TOWER: We don' t know.5

MR. McGRATH: You don' t know? Do you6

know whet her your r i ght s under t he Energy Access Agreement7

woul d t ake pr i or i t y over i nt er r upt i bl e l oad i n8

Newf oundl and?9

MR. SIDEBOTTOM: I t doesn' t t ake a10

pr i or i t y.11

MR. McGRATH: Okay. I f we can go back12

t o 4( e) , I bel i eve i t was - - -13

THE CHAIR: Sor r y, Mr . Si debot t om. I14

di dn' t hear t he l ast answer .15

MR. SIDEBOTTOM: So Mr . Chai r , I don' t16

bel i eve t he i nt er r upt i bl e l oad - - i t ' s l oad i n17

Newf oundl and t hat i t st i l l count s as l oad.18

THE CHAIR: As Newf oundl and l oad.19

MR. SIDEBOTTOM: I t does, yes.20

MR. McGRATH: So anot her i t em i ncl uded21

t her e was Newf oundl and and Labr ador hydr ol ogy event s, so22

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t hat al so woul d be excl uded f r om t he def i ni t i on of f or ce1

maj eur e.2

MS. TOWER: That i s cor r ect .3 MR. McGRATH: What are hydr ol ogy4

events i n Newf oundl and? What i s t hat i ntended t o mean?5

MR. SIDEBOTTOM: I t ' s the var i abi l i t y6

i n pr eci pi t at i on, so as has been set out by Nal cor i n t he7

t echni cal conf er ence, t her e' s a var i abi l i t y i n t he amount8

of pr eci pi t at i on year t o year , and so those hydr ol ogy9

event s mean that t he amount of r esour ce i n a par t i cul ar10

year i s di f f erent .11

MR. McGRATH: And as I under st and i t ,12

Nal cor wi l l pr ovi de you wi t h a f or ecast of what i t expect s13

f or ener gy mont hl y and t hat your annual sol i ci t at i on i s14

goi ng t o be based on, i s i t t he May f or ecast ?15

MR. SIDEBOTTOM: Yes. Nal cor wi l l16

pr ovi de us mont hl y a 24- mont h out l ook of t he resour ces17

t hey see f r om t hei r syst em. And t ypi cal l y, t he wet t est18

season i s t hr ough t he ear l y spr i ng unt i l May, and at t he19

end of May, you have t he ver y best l ook at what t he20

r esour ce wi l l l ook l i ke f or t he next t wo year s.21

And so t he sol i ci t at i on i s desi gned t o22

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use t he best avai l abl e i nf or mat i on, and t hat ' s how i t ' s1

t i med. We st i l l act ual l y get a mont hl y updat e of t hat 24-2

mont h vi ew, whi ch i s ver y hel pf ul because you act ual l y get3

a l i ne of si ght goi ng wel l out i nt o the f ut ur e on how much4

energy r esour ce i s comi ng out of Newf oundl and and5

Labr ador , whi ch i s, f r ankl y, a ver y hel pf ul t hi ng when6

you’ r e pl anni ng what you’ r e goi ng t o do wi t h your energy7

pur chase r equi r ement s i nt o t he f ut ur e.8

MR. McGRATH: And so j ust goi ng back9

t o t hat t er m “hydr ol ogy event s i n Newf oundl and and10

Labr ador , ” i f , i n t hese f or ecast s, i t ’ s ant i ci pat ed t hat11

Newf oundl and and Labr ador i s goi ng t o exper i ence a12

par t i cul ar l y dr y year and t hat ’ s t aken i nt o account i n t he13

f or ecast , am I cor r ect i n assumi ng t hat when i t sees i t s14

dr y year t hat wi l l not be a hydr ol ogy event i n15

Newf oundl and and Labrador?16

MR. SIDEBOTTOM: I t hi nk t he hydr ol ogy17

event i s t here t o recogni ze t hat what you see i n May may18

be di f f er ent by Sept ember . You’ r e usi ng your best19

avai l abl e i nf or mat i on, and t hat ’ s r easonabl e, and t her e i s20

r el i ef f or t hat change f r om an aver age. I mean, t he way21

t hey hydr aul i c syst em wi l l wor k i s you’ ve got 60 year s of22

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not have been bi d i nt o a sol i ci t at i on i n t hi s cl ause?1

MR. SIDEBOTTOM: So t hi s woul d go t o2

t he var i ance amount s or t he shor t f al l .3

MR. McGRATH: Yes.4

MR. SIDEBOTTOM: And t hat ’ l l be a5

quant i f i abl e amount of ener gy, and i f ei t her Emer a or6

Nal cor ar e unabl e t o pr ovi de t hat , t her e’ l l be a shor t f al l7

- - -8

MR. McGRATH: Ri ght .9

MR. SIDEBOTTOM: - - - cal cul at ed as a10

vol ume. And we woul d use f orward curve pr i ci ng t o11

under st and t he pr i ci ng of t hat . From t hat we coul d12

underst and what t he r espect i ve compensat i on mi ght be13

associ at ed wi t h mi ssi ng t hat var i ance. I t ’ s a f ai r l y14

common pr act i ce when you l ook at cont r act non- per f ormance.15

MR. McGRATH: Yeah, I guess wher e I ’ m16

havi ng a bi t of di f f i cul t y t hough i s t hat t hi s i s ener gy.17

So i f i t ’ s Emer a and i f Emer a was obl i ged under a var i ance18

i t ’ s t r i gger ed t o pr ovi de t he f ul l 300 but i t onl y bi ds i n19

200, i t doesn’ t bi d i n t he addi t i onal 100 gi gawat t hour s.20

So you don’ t know what t hat bi d pr i ce woul d have been, you21

don’ t know when i t woul d have been bi d f or i n the year ;22

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how do you capt ur e a val ue f or i t ?1

MR. SIDEBOTTOM: Wel l , we absol ut el y2

have a cap on pr i ci ng. So t her e’ s a pr i ci ng i ndi cat i on3whi ch woul d be one r easonabl e way t o assess t he val ue of4

t he ener gy and - - -5

MR. McGRATH: That cap woul d be t he6

wor st - - t he wor st r at e that r at epayer s coul d expect t o7

see t hough; cor r ect ?8


MR. McGRATH: So why woul d you assume10

t hat as a st ar t i ng poi nt f or compensat i on? You’ ve l ost11

when you never know what t he bi d mi ght have been.12

MR. O’CONNOR: So I t hi nk i t ’ s t he13

damages t hat f l ow f r om t hei r non- per f or mance. So i n a14

hypot het i cal exampl e you’ ve pr ovi ded wher e t hey’ ve - -15

t her e are var i ances occur r ed and Emera has not bi d i n t o16

i t , we woul d have t o det ermi ne what are t he act ual damages17

t hat f l ow f r om t hat .18

So i n your exampl e we may t ake t he19

aver age pr i ce outcome of everyone el se who was i n t hat20

sol i ci t at i on and compar e t hat t o what we - - i n t hi s - - i n21

your exampl e, 100 GWh t hat t hey di dn’ t per f orm on and we22

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coul d say t hat t he i ncr ement al cost t o cust omer s i s t he1

damages t hat f l owed f r om t hat - - f r om t hei r f ai l ur e t o2

per f or m or f ai l ur e to pr ovi de under t he agr eement , but3

i t ’ s t he damages t hat nat ur al l y f l ow f r om i t .4

And t hat ’ s - - t hat woul d be one5

appr oach; I ’ m sur e t her e’ s ot her s. And i n any event , wi t h6

what ever sol ut i on we come up t o, t he Boar d wi l l hol d us7

account abl e t o make sure t hat i t ’ s done i n a manner t hat ’ s8

pr udent and i n t he best i nt er est s of our cust omer s, so - - -9

MR. McGRATH: And j ust i n t er ms of10

t hat , so - - and Ms. Tower , I t hi nk you spoke t o t hi s11

ear l i er , t hat t he Boar d woul d be t he f i nal ar bi t er i n12

t er ms of what t he amount of compensat i on woul d be?13

MS. TOWER: I t hi nk ul t i mat el y t hey14

have t he abi l i t y t o l ook and see whet her i t was15

appr opr i ate, whether t he - - you know, I guess whether Nova16

Scot i a Power ’ s been pr udent . I s t hat - - -17

MR. O’CONNOR: I woul dn’ t be aski ng18

t he Boar d t o determi ne t he amount s. I - - my perspect i ve19

woul d be i f t her e i s damages, t her e woul d be an abi l i t y t o20

l ook at t hose and t o t est t hem f or r easonabl eness and di d21

we do ever ythi ng under t he cont r act and i s t hat t he r i ght22

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amount t hat cust omer s shoul d get f r om f ai l ur e t o per f or m.1

So that woul d be my vi ew on - - I woul dn’ t be aski ng t he2

Boar d t o cal cul at e t he number at al l , no.3 MR. McGRATH: But i f t he Boar d4

det ermi ned t hat t he amount of compensat i on t hat NSPI5

r ecei ved was i nsuf f i ci ent t her e mi ght be some sort of6

di sal l owance associ at ed wi t h that ?7

MR. O’CONNOR: Yes, t hat coul d be a8

possi bl e out come, yes.9

MR. McGRATH: Okay. Thank you.10

I do have one mor e l i ne. I t hi nk i t11

wi l l be ver y br i ef . I know I ’ ve i mposed and r un over12

t i me, Mr . Chai r . So I ’ m more t han happy t o br eak now and13

come back and deal wi t h t hat .14

THE CHAIR: Okay. I t hi nk we’ l l come15

back at 20 past 2: 00.16

- - - Upon r ecessi ng at 1: 08 p. m.17

- - - Upon resumi ng at 2: 20 p. m.18

THE CHAIR: Pr ovi nce.19

MR. McGRATH: Thank you, Mr . Chai r .20

MR. RICK JANEGA, Resumed:21

MS. NANCY TOWER, Resumed:22

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i f i t accept s an awar d and an annual sol i ci t at i on.1

MR. O'CONNOR: That ’ s cor r ect.2

MR. McGRATH: And woul d t hi s document3

cont ai n t erms such as f orce maj eur e, whi ch woul d be normal4

commerci al t erms t hat mi ght appl y t o t hi s ar r angement ?5

MR. O'CONNOR: That ’ s cor r ect.6

There’ s - - wi t hi n t hat document i s a f or ce maj eure cl ause.7

MR. McGRATH: And i s t hi s somet hi ng8

you’ r e abl e t o f i l e i n shor t or der , t hi s document ?9

MR. O'CONNOR: So t he EEI i s a10

document t hat I bel i eve that ’ s al r eady been f i l ed wi t h t he11

Boar d by Nova Scot i a Power f or ot her t r ansact i ons. I t ’ s12

an i ndust r y st andar d agr eement . I do bel i eve i t ’ s13

avai l abl e publ i cl y at t hei r Web si t e; t he mast er agr eement14

i s there.15

We, I guess, wi l l , once t hi s agr eement16

i s done and we have an EEI i n pl ace of cour se we woul d17

f i l e t hat wi t h t he Boar d, but - - -18

THE CHAIR: Can you f i l e t he f or m of19

i t ?20

MR. O'CONNOR: Sorry?21

THE CHAIR: Can you f i l e t he f or m of22

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Conduct and FAM Audi t1

MS. TOWER: Sor r y; di d you say 7. 3 or2

t he l ast page?3

MR. McGRATH: Bot h.4

(SHORT PAUSE)5

MR. McGRATH: So wi t hout get t i ng i nt o6

i t i n t oo much det ai l , j ust a gener al quest i on i n t er ms of7

t hose t wo ref er ences t hat I made, one to Ar t i cl e 7. 3 and8

t he ot her t o t he excer pt f r om t he Boar d’ s 2007 deci si on,9

woul d you j ust agr ee gener al l y t hat t hose pr ovi si ons10

cont empl at e t hat i n t r ansact i ons t hat NSPI ent er s wi t h11

af f i l i at es i t wi l l make ef f or t s t o ensur e t hat i t s12

count er par t i es have, t o the extent possi bl e, make13

commi t ment s t o pr ovi de document at i on avai l abl e t o t he14

Boar d t o revi ew?15

MR. O'CONNOR: I woul d agr ee.16

MR. McGRATH: And i f I can go back t o17

t he Ener gy Access Agr eement , M- 134, Cl ause 3( i ) , t her e’ s a18

pr ovi si on t her e deal i ng wi t h audi t r i ght s. I t says:19

20

“The Par t i es agr ee t hat t he audi t21

pr ovi si ons t o be i ncl uded i n t he22

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Fi nal Agr eement shal l be based on1

t he pr i nci pl es of r eci pr oci t y,2

conf i dent i al i t y of commer ci al l y3sensi t i ve i nf or mat i on, and4

di scl osur e of i nf or mat i on5

r equi r ed by each Par t y t o6

determi ne compl i ance wi t h t he7

Fi nal Agr eement . ”8

9

Wi l l t he f i nal agr eement al so i ncl ude10

pr ovi si ons t hat wi l l pr ovi de f or under t aki ngs or consent s11

f or t he Boar d t o have access t o t he document at i on of t he12

par t i es t o over see NSPI ’ s t r ansact i ons r el at i ng t o t hese13

ar r angement s?14

MR. O'CONNOR: We f ul l y ant i ci pat e15

t hat al l of t he t r ansact i ons wi t h our af f i l i at es wi l l16

conf or m wi t h t he Af f i l i at e Code and wi l l be subj ect t o t he17

Code.18

MR. McGRATH: So you’ l l seek t o have19

pr ovi si ons i n t he f i nal agr eement t hat woul d pr ovi de f or20

Boar d access t o document at i on?21

MR. O'CONNOR: So t he Boar d has access22

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t o thi s document and al l t r ansact i ons t hat we mi ght do1

wi t h t he - - or any t r ansact i on we woul d do wi t h t he2

af f i l i at e woul d, of cour se, be subj ect t o af f i l i at e3

scr ut i ny.4

MR. McGRATH: Ri ght . So I ’ m aski ng5

speci f i cal l y t hough whet her when you go t o f i nal i ze t he6

audi t r i ght s pr ovi si ons and t he f i nal agr eement whet her7

you wi l l t ake st eps t o i ncl ude a speci f i c pr ovi si on i n t he8

f i nal agr eement t hat out l i nes t hat Boar d r i ght t o access?9

MR. O'CONNOR: Yes, we wi l l do t hat .10

MR. McGRATH: Thank you.11

MR. DEVEAU: J ust because I was goi ng12

t o ask t hat same quest i on, are you aski ng whether t hey13

i nt end t o ext end t he access r i ght s j ust t o an af f i l i at e or14

t o Nal cor , i n t er ms of hydr ol ogy repor t s and so f or t h?15

Was t hat your quest i on?16

MR. McGRATH: Wel l , I guess as I - - i t17

wasn’ t speci f i cal l y, al t hough I woul d under st and t hat t he18

document put s t he onus on NSPI and i t s af f i l i at es t o make19

ef f or t s t o do j ust t hat . I don’ t t hi nk i t necessar i l y20

commi t s t hem t o do i t , as I under st and i t .21

Those ar e my quest i ons, Mr . Chai r .22

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THE CHAIR: Thank you ver y much.1

Mr . Outhouse?2

MR. OUTHOUSE: Thank you, Mr . Chai r .3CROSS-EXAMINATION BY MR. OUTHOUSE4

MR. OUTHOUSE: I j ust want t o st ar t by5

cl ar i f yi ng a f ew t hi ngs t hat wer e sai d t hi s mor ni ng, and6

we’ l l st ar t wi t h a ser i es of quest i ons whi ch Mr . Mer r i ck7

asked you about t he 1. 2 t erawat t commi t ment .8

And he went t hr ough the f orgi vabl e9

event s and t he commi t ment i n 6(a) of t he Agreement . And10

at t he end of al l t hat af t er you’ d gi ven hi m your11

expl anat i ons, t he quest i on he put t o you was t hat as a12

r esul t of t hat commi t ment ei t her Nal cor , or Nal cor and13

Emera combi ned i f t here was a var i ance, woul d suppl y, on14

aver age, 1. 2 t er awat t hour s of ener gy per year f or t he15

t er m of t he agr eement ; t hat i s, unt i l 2041, and t he answer16

t o t hat quest i on - - I ’ m not sur e whi ch one of your of f er ed17

i t - - was yes. I t may have come j ust as a r el i ef t o you18

t o be abl e t o say t hat .19

But my under st andi ng i s t hat t her e i s20

no commi t ment t o suppl y t hat energy. There i s a21

commi t ment t o, i f I r ead 6( a) of t he agr eement - - j ust so22

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MS. TOWER: Yeah.1

MR. OUTHOUSE: Somebody say yes. Al l2

r i ght .3

And I t em Number 2, i t ' s, "any Ener gy4

suppl i ed t o NSPI by Nal cor dur i ng" t hat cont r act year ,5

subj ect t o cer t ai n t hi ngs whi ch ar e l ef t out , l i ke Nal cor6

suppl i ed ener gy, whi ch has al r eady been i ncl uded; "a7

Nal cor Var i ance Amount " , whi ch i s excl uded; and, of8

cour se, " t he Nova Scot i a Bl ock" , i ncl udi ng t he9

suppl ement al ener gy; corr ect ?10

MR. O'CONNOR: Cor r ect .11

MR. OUTHOUSE: Okay. So we' r e f i ne so12

f ar . Her e' s wher e I have t he pr obl em, t hr ee:13

14

"Nal cor Bi d Ener gy t o t he extent15

not accept ed by or suppl i ed t o,16

NSPI i n such year . . . "17

18

Now, I had al ways underst ood t hat t o19

t he ext ent t hat Nal cor bi d ener gy - - and i t ' s a def i ned20

t er m, and we can l ook back at t hat i f we want t o, but i t ' s21

t he amount t hat you bi d, and i f NSPI accept ed that , t hat22

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does count , i f i t doesn' t accept i t ' s al so count ed;1

correct?2

MR. O'CONNOR: Cor r ect .3 MR. OUTHOUSE: Now, i t says, " or4

suppl i ed t o". And my quest i on i s, i f i t ' s not suppl i ed t o5

NSPI because of a f or gi vabl e event , does i t count under6

t hi s cl ause t oward the commi t ment nonethel ess?7

And t hen you mi ght want t o l ook at t he8

- - i n - - on page 6 when i t def i nes t he Nal cor bi d, 4( b) ,9

you' l l see that when i t t al ks about t he Nal cor bi d ener gy10

i t t hen says i n t he l ast sent ence of 4( b) :11

12

"Fol l owi ng accept ance of a Nal cor13

bi d by NSPI , Nal cor shal l be14

obl i gat ed t o sel l and del i ver t o15

NSPI t he Nal cor Bi d Energy16

subj ect t o t he pr ovi si ons of17

Sect i on 4( d) and ( e) . "18

19

And ( d) i s t he Nal cor r edel i ver y,20

whi ch I ' m not concer ned wi t h f or t he moment , and ( e) , and21

( e) , of cour se, i s t he f or gi vabl e event s.22

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So t her e' s a r i ght i n 4( b) not t o1

del i ver Nal cor Bi d Ener gy due t o a f or gi vabl e event or2

f or gi vabl e event s.3

And t hen i t seems t o me, when I r ead4

6( a) ( i i i ) , t hat ener gy whi ch was not suppl i ed count s5

t owar ds t he f ul f i l l ment of t he 1. 2 aver age commi t ment .6

So t hat ' s t he pr obl em I ' m havi ng wi t h7

i t , and I woul d ask you to respond whet her t hat ' s t he8

i nt ent , as you under st and i t , or t hat ' s the ef f ect as you9

under st and i t .10

MR. O'CONNOR: So I ' m st i l l cat chi ng11

up - - -12

MR. OUTHOUSE: Al l r i ght , you go13

ahead.14

MR. O'CONNOR: - - - qui t e honestl y.15

But t he - - I can speak to t he i nt ent .16

So t he i nt ent i s not t o doubl e count any vol umes at al l .17

And i t wi l l j ust t ake me a moment or18

maybe a coupl e of moment s t o - - -19

MR. OUTHOUSE: Al l r i ght .20

MR. O'CONNOR: - - - f ol l ow up.21

(SHORT PAUSE) 22

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MR. O'CONNOR: Sor r y f or the del ay.1

So i n t hat case, t he f or gi vabl e event2

woul d r educe t he bi d amount , so i t woul dn' t be i ncl uded i n3t he cal cul at i on i n t hat case.4

MR. OUTHOUSE: I appr eci at e t hat ,5

Mr . O' Connor , and I ' m not t r yi ng at al l t o be di f f i cul t .6

I ' m concer ned t hat despi t e what was sai d t hi s mor ni ng t hat7

t he 1. 2 terawat t hour s on average commi t ment - - -8

MR. O'CONNOR: Yes.9

MR. OUTHOUSE: - - - get s er oded by10

f or gi vabl e event s. And I t hought I hear d f r om t he panel11

t hi s mor ni ng t hat t hat di d not happen.12

MR. O'CONNOR: No.13

MS. TOWER: No.14

MR. O'CONNOR: No, t hat - - i t does not15

get er oded - - -16

MR. OUTHOUSE: So - - -17

MR. O'CONNOR: - - - by f or gi vabl e18

event s.19

MR. OUTHOUSE: - - - i f t hi s l anguage20

t hat I ' ve r ef er r ed you t o per mi t s t hat , on r ef l ecti on, i f21

you r ead t hat , i t ' s goi ng t o be changed, I t ake i t ?22

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MR. O'CONNOR: Yes.2

MS. TOWER: Yes.3

MR. O'CONNOR: I t woul d change - - -4

MS. TOWER: We' l l make i t cl ear5

because t hat i s not t he i nt ent .6

MR. O'CONNOR: That ' s not t he i nt ent7

at al l .8

MR. OUTHOUSE: Okay, t hat ' s f i ne.9

I j ust want t o t ur n t o your Openi ng10

St atement f or a second.11

Mr . Chai r , I have f or got t en t he number12

of t hat exhi bi t . I t hi nk i t ' s pr obabl y 145. Okay.13

And i f we woul d t ur n, Mr . Goodi ne, t o14

page 3 of t hat ; yes, gr een ener gy sect i on.15

And I not ed t hi s mor ni ng,16

Mr . O' Connor , t hat when you were answer i ng a quest i on t hat17

had been put by Mr . Bl ackbur n about t he pr i ci ng - - t he18

maxi mum pr i ce cl ause and he was f ocusi ng on 4( c) ( i i ) , t he19

al t ernat e market , you made a comment t o t he ef f ect t hat20

t hat cl ause woul dn' t appl y t o a gr een ener gy pr oduct ; t hat21

i t woul dn' t al l ow ener gy t o be pr i ced f or bi ddi ng pur poses22

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t o you, t o NSPI , on a gr een ener gy basi s.1

And i n your Openi ng St atement , t he2

bul l et poi nt by l i ne 7 says:34

"Gr een- ener gy pr i ci ng i s not5

appl i cabl e t o the economy ener gy6

pr oduct t hat i s t he subj ect of7

t he Energy Access Agr eement . "8

9

Cor r ect ?10

MR. O'CONNOR: Yes, that ' s cor r ect .11

MR. OUTHOUSE: And am I i nt er pr et i ng12

i t cor r ect l y, t hen, t hat you' r e sayi ng t hat NSPI ' s13

posi t i on i s t hat Nal cor has agr eed, i n t he Ener gy Access14

Agr eement , t hat i t cannot , f or bi ddi ng pur poses t o you, be15

pr i ci ng a gr een ener gy pr oduct but i s pr i ci ng an ener gy16

onl y pr oduct ?17

MR. O'CONNOR: Yes, t hat i s cor r ect .18

MR. OUTHOUSE: So t he di scussi on t hat19

I see i n t he r epor t by Mr . Cher ni ck and Mr . Par ker , f or20

exampl e, about t he opt i ons t hat may become avai l abl e i n21

t he gr een ener gy mar ket i n var i ous nor t h- east er n st at es22

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f or pr emi um pr i ci ng does not det r act f r om t he ar r angement s1

i n t he Energy Access Agreement and does not al l ow t he2

set t i ng of a hi gher pr i ce?3

MR. O'CONNOR: That ' s cor r ect . Those4

- - what t hi s i s speaki ng t o i s pur el y the val ue of t he5

ener gy i t sel f . Those ot her pr oduct s ar e separ at e,6

di st i nct . They have t hei r own pr i ci ng par amet er s. They7

have thei r own market s whereby t hey wi l l get pr i ced and8

wi l l not be i ncl uded i n t hese pr i ces at al l .9

So t hese al t er nat i ve mar ket pr i ces are10

very much t he same as t he Mass Hub pr i ce, whi ch i s energy11

onl y. I t has no r enewabl e ener gy component s t o i t . I t12

has not hi ng el se. Ther e’ s no capaci t y, whi ch i s anot her13

separ at e and di st i nct pr oduct t hat t he mar ket pr i ce i s14

i ndependent l y of ener gy. Thi s i s onl y f or ener gy.15

MR. OUTHOUSE: I suppose once t he16

annual bi d pr ocess i s over , t hat pi ece i s over wi t h, i t17

woul d be open t o Nal cor t hen t o pr i ce and r espond t o any18

sol i ci t at i ons NSPI may make as i t chose?19

MR. O’CONNOR: That ’ s cor r ect, yes.20

MR. OUTHOUSE: I f i t had gr een mar ket21

oppor t uni t i es i n t hat f ol l owi ng year , i t coul d avai l22

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t hemsel ves of i t , but not f or t he annual bi d pur pose?1

MR. O’CONNOR: That ’ s cor r ect.2

MR. OUTHOUSE: And pr esumabl y i t coul d3not make commi t ments beyond one year ei t her?4

MR. O’CONNOR: The Energy Access5

Agr eement pr ohi bi t s t hem f r om doi ng t hat .6

MR. OUTHOUSE: I n r esponse t o a7

quest i on put t o you by Mr . McGr at h about t he i nt er r upt i bl e8

l oad i n Newf oundl and and whet her i t had pr i or i t y over t he9

Ener gy Access Agr eement i n t erms of quant i t y suppl i ed10

t her e under , t he answer ul t i mat el y was t hat i nt er r upt i bl e11

l oad i n Newf oundl and woul d qual i f y as Newf oundl and nat i ve12

l oad.13


MR. OUTHOUSE: Okay. There was,15

t hough, uncer t ai nt y about - - I don’ t know whet her t her e i s16

any i nt er r upt i bl e l oad i n Newf oundl and or any17

i nt er r upt i bl e r at e i n Newf oundl and, or whet her t her e i s18

any l oad under t hat r at e. I s that cor r ect ?19

MR. SIDEBOTTOM: Wel l , we’ r e not sur e20

of how many i nt er r upt i bl e cl ass cust omer s i n Newf oundl and,21

t hat ’ s tr ue of t hi s panel .22

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What I woul d l i ke t o ki nd of1

di f f er ent i at e bet ween t he t wo, because t he i nt er r upt i bl e2

cl ass cust omer we have here i n Nova Scot i a i s about3

avoi di ng capaci t y bui l d and r ecogni zi ng t hat t hr ough a4

r i der cr edi t t o t hose cust omer s. What t hey wi l l gener al l y5

count on i s a f ai r l y r egul ar suppl y of ener gy. The6

i nt er r upt i ons are qui t e i nf r equent , number i ng wel l l ess7

t han one per cent of t he year , j ust t o gi ve you a sense of8

how of t en i t mi ght happen, and i t happens a l ot l ess t han9

t hat .10

The envi si oni ng a cust omer wi l l i ng t o11

t ake a f l oat i ng or var i abl e amount of ener gy, t hat ’ s mor e12

of an i nt er r upt i bl e ener gy component , not a capaci t y, and13

i t woul d be har d t o envi si on cust omer s wi l l i ng t o t ake14

energy on 30 percent of t he year or 40 percent of t he15

year , as opposed t o a ver y hi gh percent age, whi ch t hey get16

i n Nova Scot i a.17

So t hey’ r e not as i nt er changeabl e. I18

don’ t know i f I ’ ve compl i cat ed t he r ecor d, but I ’ ve - - -19

MR. OUTHOUSE: Wel l , I ’ m goi ng t o have20

anot her go at i t . The - - my concer n i s t hat we’ ve hear d21

t he evi dence about t he hydr ol ogy i n Newf oundl and and how22

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t hey do t hei r f or ecast i ng, how - - t hei r commi t ment t o1

ser ve, what t hey cal l t hei r f i r m l oad.2

MR. SIDEBOTTOM: M’ hm.3 MR. OUTHOUSE: So i f i ndeed t her e was4

a si gni f i cant i nt er r upt i bl e l oad t hat t hey do not r egar d5

as f i r m l oad and t hat t hey do not t ake i nt o account i n6

t hei r pl anni ng, f or pl anni ng pur poses, t hi s whol e scenar i o7

of you’ ve got t o ser ve your f i r m l oad and i f i t gr ows you8

bui l d t o serve i t , and i n t he meant i me t he var i ance i s9

avai l abl e as sur pl us ener gy t o Nova Scot i a Power , or10

ot her s, t hat st ar t s t o er ode and shr i nk - - t hat sur pl us11

energy shr i nks dependi ng on how much i nt err upt i bl e l oad12

you have on t he syst em, because you don’ t need - - i f13

you’ ve got t he i nt er r upt i bl e l oad on t he syst em and i t14

count s as nat i ve l oad, but you can pr ess i t down and don’ t15

have t o bui l d f or i t , t han i t means t hat t her e’ s l i kel y t o16

be l ess sur pl us avai l abl e i n t he NL f or ecast . The Nal cor17

f or ecast , I shoul d say.18

MR. SIDEBOTTOM: So i f you coul d f i nd19

a cust omer t hat woul d be happy wi t h t hat ki nd of avai l abl e20

ener gy that woul d be t he ef f ect on t hat ener gy.21

But t hen ul t i mat el y t he f al l back i s22

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the interruptible load showing1

the absolute size, class of2

customer and percentage of3 Newfoundland load4

MR. OUTHOUSE: I want t o t ur n t o t he5

r epor t of Mr . Cher ni ck and Mr . Par ker , whi ch i s 138. And6

i f we woul d go t o page 3, pl ease, Mr . Goodi ne? Sor r y,7

page 4, Mr . Goodi ne, I apol ogi ze. Yes.8

You’ l l be pl eased t o know I ’ m not9

goi ng t o t r ai pse al l t he way t hr ough t hi s r epor t wi t h you,10

and I r eal i ze i t ’ s not your evi dence. However , i t bear s11

di r ect l y on what you’ r e appl yi ng t o t he Boar d f or . Li ne12

6, t he quest i on i s:13

14

“What ar e your concl usi ons?”15

16

And t he answer i s as f ol l ows:17

18

“We concl ude t hat many component s19

of t he proposed EAA woul d reduce20

t he quant i t y of economy energy,21

i ncrease t he pr i ce of t hat22

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ener gy, or r educe t he val ue of1

t he ener gy t o N[ ova] S[ cot i a]2

P[ ower ] . . . r at epayer s, compar ed t o3

t he assumpt i ons i n the4

Appl i cat i on. I n mor e det ai l , we5

concl ude as f ol l ows: ”6

7

Fi rs t bul l et poi nt :8

9

“The quant i t y of t he mar ket -10

pr i ced energy t hat woul d be11

assured by t he EAA i s12

subst ant i al l y l ess t han t he13

quant i t y t he Appl i cat i on assumes14

woul d be avai l abl e. ”15

16

What i s your r esponse t o t hat17

concl usi on; what do you say?18

MR. SIDEBOTTOM: I woul d say t he EAA19

of f er s a subst ant i ve amount of ener gy. I t s mi ni mum amount20

i s wel l mat ched wi t h t he l ow- l oad scenar i o f r om21

Newf oundl and. And t hat t her e ar e suf f i ci ent ot her22

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obl i gat i ons, whi ch i s t o cont i nue t o bi d i n t he ener gy,1

even t hough t he 1. 2 commi t ment i s made, and al t ernat e2

pat hs t hrough New Br unswi ck t o manage any f orm of l oad3gr owt h beyond t hat i nt o a base- case scenar i o. So I woul d4

di sagr ee wi t h t hat .5

MR. OUTHOUSE: The - - as I under st and,6

t hat concl usi on i n t he r epor t was based on t wo - - a coupl e7

of consi der at i ons at l east , one of whi ch was t hat t he8

quant i t y of f er ed was l ess, and B, t hat t he quant i t y t aken9

was ver y l i kel y t o be l ess. I n ot her wor ds, t he t ake up10

of what was of f er ed.11

Wi t h r espect t o t he t ake up of t he12

ener gy, what woul d you - - as I under st and t he hypot hesi s13

i t ’ s t hi s; t hat t he appl i cat i on was pr emi sed on t he basi s14

t hat t he sur pl us ener gy woul d be avai l abl e at al l t i mes - -15

t hat was t he assumpt i on i n st r at egi st - - and t hat at ever y16

poi nt i n t i me when t hat energy, based on t he Mass Hub f or17

pr i ce cur ve, was economi c - - i t was l ess t han t he18

company’ s cost of generat i on t he company woul d buy - - and19

t hat ’ s how t hose sur pl us energy pur chases were20

const r ucted. I s t hat cor r ect ?21

MR. SIDEBOTTOM : Yes, i t used a22

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mar ket - based pr i ce f or t he ener gy and i t appl i ed t hat1

val ue t o when i t t ook i t , yes.2

MR. OUTHOUSE: Now, under t he Energy3

Access Agr eement , t here i s no l onger an assumpt i on t hat4

t he sur pl us ener gy wi l l be avai l abl e at al l t i mes, but i t5

wi l l be avai l abl e i n a par t i cul ar f or mat , namel y, once a6

year i n an annual bi d, guar ant eed. That ' s the onl y7

guar ant ee; cor r ect ?8

MR. SIDEBOTTOM : That ' s t he backst op9

arr angement , yes.10

MR. OUTHOUSE: Sur e. And I r eal i ze11

behi nd t hat t her e can be ot her day- t o- day pur chases, but12

i n t er ms of assur ed access, i t ' s t hr ough t hat annual bi d.13

MR. SIDEBOTTOM : That ' s r i ght . And i f14

you take a l ook at t he EA, we woul d model t hi s access t o15

t he ener gy i dent i cal l y t o what we di d i n t he pr i or16

model l i ng scenar i o because i t avai l s of us of an aver age17

of t he ener gy, whi ch i s not unl i ke any ot her var i abl e18

r esour ce we have.19

The way t o t hi nk of t hi s i s i f we do20

an appl i cat i on f or a new hydr o pr oj ect , we know t hat hydr o21

has a var i abi l i t y t hr ough t i me, as do wi nd pr oj ect s. And22

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t he best - - t he best way to model t hem i nt o t i me i s t o use1

an aver age of t he out put , and t hat best r ef l ect s t he l ong-2

t er m val ue of - - of a deci si on.3So i n f act , t he wi nd al t er nat i ve was4

done i n t he same way. We know i t ' s a var i abl e r esour ce,5

but t he best avai l abl e way to do t hat i s act ual l y to model6

i t as an aver age t hr ough t i me.7

MR. OUTHOUSE: So i f I under st and your8

answer cor r ect l y, Mr . Si debot t om, what you' r e sayi ng i s9

t he f act t hat t he EAA has packaged t he guar ant eed access10

as i t has does not negat i vel y i mpact , i n your opi ni on - -11

wi l l not negat i vel y i mpact , i n your opi ni on, on t he12

pr i ci ng t hat wi l l be obt ai ned or t he quant i t i es?13

MR. SIDEBOTTOM : I woul d agr ee wi t h14

t hat .15

MR. OUTHOUSE: J ust t ur n t o page 19 of16

t hat r epor t , at l i ne 28. Ther e t he aut hor s concl ude t hi s17

- - and t hey' r e r ef err i ng t o an exchange between you and18

Mr . Cher ni ck at t he Oct ober 28t h t echni cal conf er ence.19

So I assume you' ve pr obabl y read t hi s20

wi t h some car e, Mr . Si debot t om?21

MR. SIDEBOTTOM : I have, Mr . Out house.22

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MR. OUTHOUSE: And t he aut hor s t hen1

concl ude t hi s:2

3

" I n other words, NSPI woul d be4

ent i r el y l ocked i nt o a speci f i c5

del i ver y schedul e, t ypi cal l y a6

const ant amount of energy i n each7

hour i n t he year ahead market ,8

and woul d be requi r ed t o t ake t he9

power whet her or not i t was10

benef i ci al t o NSPI r at epayer s. "11

( As r ead)12

13

What do you say to t hat ?14

MR. SIDEBOTTOM : Wel l , f i r st of f , when15

you t hi nk of what we' r e doi ng i n t he annual sol i ci t at i on,16

we' r e act ual l y choosi ng t he best opt i on f or cust omer s at17

t hat poi nt i n t i me. So we do act ual l y sel ect t he l owest18

cost sol ut i on.19

As we go f orward i nto the year , we20

opt i mi ze t he por t f ol i o of f uel s j ust l i ke we do t oday. We21

buy and sel l or i mpor t / expor t power t o bal ance our22

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por t f ol i o and change our gener at i on. We wi l l do t hat as1

wel l . And we can r esel l ener gy i nt o t he mar ket as wel l i f2

i t ' s not t he most economi c choi ce at t hat t i me.3I t r eal l y r ef l ect s how we do busi ness4

t oday, whi ch we have a por t f ol i o of f uel s and we - -5

al t hough we don' t do annual sol i ci t at i ons, we have done6

seasonal sol i ci t at i ons and mont hl y sol i ci t at i ons f or7

power. And we l ock i n l ow pr i ces f or cust omers t hr ough8

t hose per i ods of t i me.9

So t hi s act ual l y i s advant ageous10

because we get t he f i r st access t o t he energy. And we get11

one f ur t her component , whi ch i s we get a l i ne of si ght on12

how much r esour ce i s avai l abl e as wel l so we can modi f y13

how much we act ual l y pur chase i n an annual sol i ci t at i on.14

We may deci de t o buy l ess i n the15

conf i r med mat t er and mor e i n a l at er sol i ci t at i on as wel l .16

MR. OUTHOUSE: What i s new, I gat her17

f r om t he exchange t hi s mor ni ng, i s t hat i t woul d be18

unusual and perhaps unpr ecedent ed f or you to be doi ng t hi s19

on a year - ahead basi s f or power pur chases - - f or economy20

pur chases, I shoul d say.21

MR. SIDEBOTTOM : I t woul d be new, but22

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not much di f f erent t han what we do t oday i n our annual - -1

or i n our mont hl y sol i ci t at i ons.2

MR. OUTHOUSE: The next bul l et poi nt3

on page 4, i f you can j ust go back t o that f or a second,4

J ef f , i s:5

6

"The EAA product t hat woul d be7

of f er ed i n f i xed quant i t i es i n an8

annual sol i ci t at i on i s9

substant i al l y i nf er i or t o t he10

market pr i ced energy assumed i n11

t he appl i cat i on and embedded i n12

Fi gur e 4. 4. " ( As r ead)13

14

What ' s your r esponse t o t hat ?15

MR. SIDEBOTTOM : I si mpl y di sagr ee.16

I ' m ver y comf or t abl e wi t h t he f act t hat t he way the EAA17

has been const r uct ed i s consi st ent wi t h how we woul d model18

i t .19

So i f we act ual l y went out and sai d,20

"How woul d you model t hi s par t i cul ar oppor t uni t y i n our21

st r at egi st model ?" we woul d do i t as we di d - - di d bef or e22

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t ake one megawat t i f i t i s not t he r i ght answer f or1

cust omer s. So t he pr i ce and quant i t y r i sk i s managed2

t hr ough t he f l exi bi l i t y of t he RFP pr ocess, so i t ' s3

r eserved f or us, and secondl y, we hol d t he f r eedom t o4

award based on our cul mi nat i on of what ' s t he best economi c5

sol ut i on f or t he cust omer s.6

MR. OUTHOUSE: Mr . Si debot t om, t he7

aut hor s of t he r epor t have l i st - - speci f i cal l y l i st ed a8

number of addi t i onal r i sks t hat t hey say t hey have9

i dent i f i ed i n t he EAA, and t hose ar e f ound at page 31 - -10

st ar t of page 31, car r y over ont o page 32. And t he f i r st11

of t hose i s t hat :12

13

"The Appl i cat i on [ t hat ' s t he14

or i gi nal Appl i cat i on] assumed15

t hat NSPI woul d have access t o at16

l east 300 megawat t s of economy17

ener gy i n ever y hour and at l east18

2. 4 t er awat t hour s i n ever y year19

of t he Mar i t i me Li nk' s exi st ence20

t o 2052 and beyond. However , t he21

EAA woul d put r at epayer s at r i sk22

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t hat Nal cor wi l l have l ess t han1

1. 8 t er awat t hour s t o of f er i n2

any year and pot ent i al l y no3ener gy t o of f er i n some per i ods. "4

( As r ead)5

6

And t hey i dent i f y that as an7

addi t i onal r i sk.8

As compar ed t o the or i gi nal9

appl i cat i on, what do you say?10

MR. SIDEBOTTOM : I woul d say t hat t he11

EAA i s pr ovi di ng Nova Scot i a Power wi t h suf f i ci ent ener gy12

access so t hat we can ensure t hat t he l ow- l oad case, whi ch13

i s - - has been i dent i f i ed as t he mor e l i kel y - - most14

l i kel y case, wi l l have suf f i ci ent economy ener gy to yi el d15

t he benef i t s as set out i n t hat - - t hat par t i cul ar16

model l i ng r un.17

MR. OUTHOUSE: The next bul l et poi nt18

says:19

20

"The appl i cat i on assumes t hat21

NSPI coul d pur chase economy22

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energy on an hour l y basi s when i t1

was l ess expensi ve t han i t s own2

generat i on. However , t he EAA3

woul d requi r e NSPI t o commi t t o4

pur chases up t o a year i n5

advance, put t i ng r at epayer s at6

r i sk of pur chasi ng power t hat i s7

not needed or benef i ci al and of8

mi ssi ng oppor t uni t i es t o pur chase9

energi es t hat woul d have r educed10

cost s. " ( As r ead)11

12

For get t i ng t he l ast par t f or a moment ,13

up to t he poi nt wher e i t says t he EAA woul d r equi r e NSPI14

t o commi t t o pur chases up to a year i n advance, are t he15

st at ement s t her e f act ual l y cor r ect , bef or e we get t o t he16

r i sk shi f t i ng part ?17

MR. SIDEBOTTOM : So t he - - t he pr i ce18

of t he economy energy i s most l i kel y goi ng t o be an i ndex19

pr i ce. So i t may be a f l oat i ng - - f l oat i ng i ndex.20

So the act ual pr i ce of t he energy may21

not be act ual l y known unt i l t he hour or t he day ahead.22

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MR. OUTHOUSE: Sur e.1

MR. SIDEBOTTOM : Ther e' s al so t he2

abi l i t y t o f i x t hat wi t h hedgi ng. So t he pr i ci ng3const r uct woul d be known one - - one year i n advance, yes.4

MR. OUTHOUSE: So - - but t he5

commi t ment woul d al so be one year i n advance.6

MR. SIDEBOTTOM : Yes, i t woul d.7

MR. OUTHOUSE: And so t he aut hor s ar e8

sayi ng t hat creat es r i sk - - -9

MR. SIDEBOTTOM : I woul d - - -10

MR. OUTHOUSE: - - - f or NSPI ' s11

cust omers because t hey now may wi nd up i n a si t uat i on12

wher e i t ' s not economy ener gy at al l .13

MR. SIDEBOTTOM: I woul d put i t t o you14

t he r eason we woul d be sel ect i ng t hi s ener gy i s because i t15

i s t he l owest cost opt i on and so - - -16

MR. OUTHOUSE: On a year- ahead basi s.17

MR. SIDEBOTTOM: On a year - ahead18

basi s.19

So i f we sel ect ed t hat ener gy at t hat20

poi nt i n t i me, we can mi t i gat e t hat cost by resel l i ng some21

ot her ener gy equi val ent l y. The el ect r on i s st i l l an22

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i ndependent el ect r on. And we coul d r un ot her gener at i on1

and st i l l opt i mi ze our over al l cost s f or Nova Scot i a2

cust omer s.3

So t hat i s st i l l wi t hi n our abi l i t y4

and our r i ght s t o opt i mi ze our por t f ol i o. So I don' t5

act ual l y see t hat i n t he same way as a r i sk as Mr .6

Cher ni ck has set out her e.7

THE CHAIR: Can I j ust make sure I8

under st and t hi s?9

So on t he pr i ce i ssue, you say i t ' s10

goi ng t o be an i ndexed pr i ce, so i t woul d be, f or exampl e,11

Mass Hub, what ever t hat happens t o be on t he day you t ake12

i t , l ess somet hi ng - - -13


THE CHAIR: - - - t hat you pr e- agr ee.15

So t hen t he pr i ce wi l l r ef l ect t he16

pr i ce, you' r e sayi ng, on t he day t hat i t ' s act ual l y17

pur chased, so I t hi nk I under st and t hat . I t ' s t he18

f l exi bi l i t y on quant i t y t hat I t hi nk I mi ssed.19

MR. SIDEBOTTOM: So t he quant i t y wi l l20

be del i ver ed and t he pr i ce t o Nal cor wi l l be del i ver ed.21

That i s t he commi t ment i n t he EAA.22

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What Nova Scot i a st i l l has t he abi l i t y1

t o do i s l et ' s assume t hat t hat ener gy was not t he l owest2

cost t hat day. We coul d t hen r esel l ener gy i nt o t he3market , assumi ng t hat market i s now hi gher . So we can4

t hen r eal i ze t he di f f er ence bet ween our gener at i on cost s5

because we' r e now goi ng t o run l ower cost i nt er nal6

gener at i on and sel l ener gy i nt o t he mar ket f or t he7

di f f erent i al .8

And so t hat di f f er ent i al i n val ue,9

because we sol d some ener gy, woul d al l ow us t o move t hat10

- - ef f ect i vel y move t hat ener gy out i nt o t he mar ket .11

I don' t know i f I was cl ear enough on12

that , but i t - - -13

THE CHAIR: Yeah. So i n ot her wor ds,14

you' r e commi t t ed t o t he Nal cor vol ume. You' ve got t o t ake15

i t , as I under st and i t . What you' r e sayi ng i s i n or der t o16

amel i or at e i t , i f , i ndeed, t he pr i ce happens t o not be17

advant ageous, you' d sel l somet hi ng el se.18

MR. SIDEBOTTOM: I woul d j ust sel l19

anot her el ect r on at t he mar ket pr i ce.20

THE CHAIR: Okay.21

Sor r y, Mr . Out house.22

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MR. OUTHOUSE: I t hi nk t hat t he ot her1

bul l et poi nt s, wi t h t he except i on of t he l ast one, have2

al r eady been cover ed, I t hi nk, di r ectl y or i ndi r ectl y, i n3

ot her evi dence. But t he l ast bul l et poi nt on r i sk on page4

32 says:5

6

"The Appl i cat i on assumed t hat7

economy energy woul d si mpl y be8

pur chased at day- ahead pr i ces9

publ i shed by I SO New Engl and.10

However , t he EAA woul d put11

r at epayer s at r i sk t hat NSPI wi l l12

al l ow Nal cor and Emera t o abuse13

many subj ect i ve and vague14

pr ovi si ons ( i ncl udi ng det er mi ni ng15

t he cost s of def er r ed del i ver y of16

economy ener gy) , i n negot i at i ons17

and l i t i gat i ons t hat woul d l i kel y18

pi t r at epayer i nt er est s agai nst19

t he i nt er est s of NSPI ' s cor por at e20

par ent . "21

22

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So as I under st and i t , t he aut hor s are1

f or ecast i ng t hat t he l anguage of t hi s agr eement and i t s2

compl exi t i es wi l l r esul t i n added cost s and uncer t ai nt i es,3creat e oppor t uni t i es f or af f i l i at e deal i ngs whi ch t he - -4

whi ch cr eat e pr obl ems of t hei r own i n the mi nd of some and5

t he Consumer Advocat e, and i f l i t i gat i on woul d pi t6

r at epayer i nt er est s agai nst NSPI ' s cor por at e par ent .7

What do you say i n r esponse to that ?8

I s i t wor t h t hat sor t of a mess?9

MR. SIDEBOTTOM: Wel l , I guess t he10

f i r st pr emi se, I si mpl y don' t agr ee t hat i t has t hat ki nd11

of r i sk.12

Nova Scot i a Power ' s books ar e f ul l y13

t r anspar ent t o t hi s Board and ar e r evi ewed on a r egul ar14

basi s. I t ' s al so t he i nt ent i on of Nova Scot i a Power t o15

exer ci se i t s r i ght s t o audi t . And t he mar ket s t hat we' r e16

deal i ng wi t h her e ar e l i qui d. Ther e' s a r eason we cal l17

t hem l i qui d mar ket s because t hey' r e i ndependent , t hey' r e18

benchmarkabl e. And so we can cal cul ate appr opr i atel y19

whet her t hose bi ds are, i n f act , what t hey' r e supposed t o20

be.21

So I do not bel i eve t hat i t wi l l be22

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hard t o det er mi ne.1

The busi ness i t sel f i s compl ex, but2

not f or t he exper t s t hat pr esi de and over vi ew t he act i ons3

of Nova Scot i a - - Nova Scot i a Power .4

MR. O'CONNOR: And i f I may j ust add5

on - - I f eel somewhat compel l ed because of t he l anguage6

her e.7

So we' r e never goi ng t o al l ow Nal cor ,8

Emera or anyone t o abuse the cont r act s or do any of t he9

t hi ngs t hat ar e al l eged her e. I don' t t hi nk t he agr eement10

i s vague. I t hi nk i t ' s f ai r l y cl ear about what t he11

obl i gat i ons are on al l t he par t i es, and we wi l l make sur e12

t hat we hol d al l of t he par t i es account abl e t o f ul f i l13

t hei r cont r actual obl i gat i ons.14

I f eel l i ke I needed t o say t hat .15

Thank you.16

MR. OUTHOUSE: I have one more ar ea of17

i nqui r y, and t hat r el at es t o t he RES st andar ds and whet her18

or not ener gy compl i es wi t h those st andar ds or count s19

t owar ds t hose st andar ds.20

Ther e' s been di scussi on i n t oday' s21

hear i ng and i n t he evi dence about t he f act t hat Nal cor ' s22

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f r om Muskr at Fal l s count s t owar ds t he renewabl e st andar d.1

I s t hat cor r ect?2

MR. SIDEBOTTOM: I bel i eve so, yes.3

MR. OUTHOUSE: Al l r i ght . But i n4

addi t i on t o t hat , under t he r enewabl e el ect r i ci t y5

r egul at i ons, t her e' s a whol e l i st of t hi ngs t hat count6

t owar ds t he st andar d, t he l ast of whi ch i s any resour ce7

t hat , i n t he opi ni on of t he Mi ni st er and consi st ent wi t h8

Canadi an st andar ds, i s abl e t o be r epl eni shed t hr ough9

natur al pr ocesses or t hr ough sust ai nabl e management10

pr act i ces so t hat t he r esour ce i s not depl et ed at cur r ent11

l evel s of consumpt i on.12

Now, do you know whether or not ener gy13

t hat comes f r om a syst em t hat woul d be ent i r el y hydr o14

woul d be consi dered r enewabl e or not under t hat st andard,15

under t hat def i ni t i on?16

MR. SIDEBOTTOM: I t hi nk we woul d - - -17

MR. OUTHOUSE: You' d wai t f or t he18

Mi ni ster .19

MR. SIDEBOTTOM: I woul d have t o go20

back t o t he Mi ni st er on t hat one.21

MR. OUTHOUSE: Yeah. And you woul dn' t22

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know i f a syst em was 95 percent r enewabl e what t he1

Mi ni st er ' s at t i t ude mi ght be?2

MR. SIDEBOTTOM: So I ' d say we3def i ni t el y know i t f or Muskr at Fal l s, and I t hi nk i t woul d4

be a conver sat i on wi t h t he Mi ni st er as t o t he rest of t he5

hydr o and whet her t hat qual i f i ed f or RES st andar ds.6

MR. OUTHOUSE: I guess my poi nt i s7

t hat t he GHG cr edi t s r et ai ned by - - t he gr een at t r i but es8

r etai ned by Nal cor under t he agr eement , you' r e not aware9

of anyt hi ng i n our l egi sl at i on t hat woul d pr ecl ude t hose10

f r om count i ng towar ds t he RES st andar d.11

MR. SIDEBOTTOM: No, I ' m not .12

MR. OUTHOUSE: I shoul d say pr ecl ude13

surpl us ener gy f r om Newf oundl and and Labr ador f r om14

qual i f yi ng f or t he r enewabl e st andar d.15

THE CHAIR: Surpl us energy t hat comes16

wi t hout t he GHG cr edi t , you mean.17

MR. OUTHOUSE: Yeah.18

THE CHAIR: Yes.19

MR. OUTHOUSE: Al l r i ght . Those ar e20

my quest i ons. Thank you.21


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The hedge st i l l f unct i ons ef f ect i vel y1

because i t woul d be an i ndex pr i ced ener gy del i ver y i n t he2

f i r st pl ace. So i t doesn’ t actual l y go i nt o t he3cal cul at i on of t he equi val ent cost .4

MR. DEVEAU: So i n t hat sense, you5

bought t he pr ot ect i on but , act ual l y, Nal cor ’ s goi ng t o get6

t he benef i t of i t .7

MR. SIDEBOTTOM: No, I woul d say t hat8

we bought t he pr ot ect i on. Nal cor i s st i l l on t he hook or9

r esponsi bl e - - -10

MR. DEVEAU: Ri ght .11

MR. SIDEBOTTOM: - - - f or t he12

di f f erence between t he r eal r epl acement energy cost and13

t he pr i ce t hat we woul d have pai d f or t he energy. So14

Nal cor , hedge or no hedge, woul d be responsi bl e f or15

exact l y t he same amount of r epl acement cost s.16

A hedge f unct i ons i ndependent l y f r om17

t hat because t hat i s st abi l i zi ng pr i ce f or cust omer s i n18

Nova Scot i a. And between t he hedge and t he val ue Nal cor19

woul d owe us r emovi ng t he energy, cust omers i n Nova Scot i a20

woul d be whol e f r om t hei r deci si on t o l ock i n t hat pr i ce.21

MR. DEVEAU: Okay. Ri ght . And I22

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di dn’ t mean anythi ng negat i ve i n t er ms of - - -1

MR. SIDEBOTTOM: No.2

MR. DEVEAU: - - - Nal cor bei ng3

pr ot ect ed, but t hey j ust have t o make up t he di f f er ence.4

MR. SIDEBOTTOM: Absol ut el y. And i t ’ s5

goi ng t o be, you know, an i nt er est i ng cal l f or t hem6

because t hey don’ t know what i t ’ s goi ng t o cost t hem.7

MR. DEVEAU: Al l r i ght .8

MR. SIDEBOTTOM: So i magi ne, you’ r e9

t r yi ng t o deci de t o go i nt o anot her mar ket t hat day and10

you’ r e t r yi ng t o pul l t he ener gy that day and t hey don’ t11

know what i t ’ s goi ng t o cost because t hey don’ t know wher e12

our r esour ces are t hat day.13

MR. DEVEAU: But t hey can r edel i ver - -14

or t hey don’ t have t o r edel i ver at a speci f i c t i me. They15

do at a cer t ai n poi nt . You know, once t hey say t hey’ r e16

goi ng t o do i t t hey’ r e goi ng t o do i t , but t hey have t o do17

i t wi t hi n 365 days. They have some opt i on of when t hey’ r e18

goi ng t o do i t .19

MR. SIDEBOTTOM: Absol ut el y. The par t20

t hey don’ t know i s how much i t ’ s goi ng t o cost t hem t o21

r emove t he ener gy f r om our schedul e.22

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MR. DEVEAU: Okay. The hydr ol ogy - -1

t he whol e hydr ol ogy i ssue, Ms. Rubi n, I t hi nk, had asked2

you, Mr . Si debot t om, i f I ’ m not mi st aken, at t he t echni cal3conf er ence - - and i t may have been Mr . Gal l ant - - whether4

you had seen t hi s i nf or mat i on bef or e i n t he or i gi nal5

appl i cat i on. And you sai d no, and t hat - - or someone sai d6

no, and t hat t hi s was - - basi cal l y, t hi s came up as a7

r esul t of t hi s - - t he negot i at i on of t hi s agr eement .8

So i n t he t echni cal conf er ence - - and9

I t hi nk i t ’ s Exhi bi t - - I want t o br i ng i t up. Mr .10

Goodi ne, I ‘ m sor r y I di dn’ t gi ve you t hi s exhi bi t . One11

t hi r t y- s i x ( 136) , I t hi nk.12

MR. GOODINE: The t r anscr i pt ?13

MR. DEVEAU: No, t he Nal cor14

pr esent at i on, 136.15

So t her e’ s - - per haps j ust - - I ’ m not16

sur e what page. J ust f l i p t hr ough. Ther e’ s a gr aph17

t her e. Keep goi ng. Keep goi ng. Yeah, r i ght t her e.18

So I suppose, r eal l y, t hi s i s t he onl y19

evi dence t hat we have - - t he Boar d has bef ore us and the20

i ntervenors as t o what - - you know, how much var i abl e21

ener gy t her e’ s goi ng t o be. And t her e’ s no - - you know,22

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t he axes don’ t have par t i cul ar t i mes and I woul d suspect1

you have seen bet t er i nf or mat i on t han t hi s.2

Thi s i s not - - i n f act , a l ot of3

peopl e t hought , I t hi nk, at t he t echni cal conf er ence t hi s4

was t he gr aph and t hen, l at er on i n t he sessi on, i t was5

sai d i t was onl y f or i l l ustr at i on. So I ’ m not sure i f6

t hose peaks and val l eys are t he act ual ones or j ust some7

sor t of i l l ust r at i on someone came up wi t h.8

So i n t erms of t he evi dence on9

hydr ol ogy, i n t er ms of pr ovi di ng evi dence - - comf or t t o10

t he Boar d and r atepayers, what can you say, you know, t o11

t he evi dence t hat t her e i s suppor t f or t he hydr ol ogy t hat12

Nal cor i s pr esent i ng t o you?13

MR. SIDEBOTTOM: So t hi s ef f ect or14

char act er i st i c of a hydr o syst em i s ver y si mi l ar t o Nova15

Scot i a, so i t makes a l ot of sense t o me f r om t he16

st andpoi nt of t he peaks and t he val l eys.17

I know Mr . J anega has seen a18

si gni f i cant amount mor e of t he det ai l ed i nf or mat i on. And19

ul t i mat el y, al l of t hi s i s backed up by t he under l yi ng20

commi t ment .21

So the hydr ol ogy i s a way of22

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expl ai ni ng how t her e’ s a l evel of comf or t t hat t hi s ener gy1

i s goi ng t o ar r i ve and why Nal cor i s al so wi l l i ng t o st ep2

up t o t he commi t ment as wel l . But ul t i mat el y, t hi s Boar d3can f ur t her r el y on the commi t ments made by Emer a and4

Nal cor .5

I woul d of f er t hat i t l ooks ver y6

r easonabl e. I t i s i n l i ne wi t h how I woul d see and how we7

t hi nk about our hydr o syst ems i n Nova Scot i a as wel l . So8

f r om a t echni cal st andpoi nt , i t ’ s wel l al i gned and i t al so9

makes a l ot of sense t hat t hat ’ s exact l y how i t woul d10

oper at e.11

MR. DEVEAU: I guess I don’ t di sagr ee12

wi t h you t hat i t makes sense i n t er ms of t her e' s peaks and13

val l eys. I t hi nk ever yone accept s t hat pr emi se. I t hi nk14

t he quest i on i s, what evi dence have you seen about t he15

number s t o back up t hi s t ype of char t i f t hi s i s j ust f or16

i l l ust r at i on.17

And I suppose my next quest i on - - I ’ l l18

gi ve you t hat one as wel l at t he same t i me - - i s i n t er ms19

of audi t r i ght s, i s t hat t he sor t of t hi ng you’ r e goi ng t o20

pur sue i n your audi t r i ght s so t hat you can see i t i n21

t er ms of , you know, t he pl anni ng t hat Nal cor ’ s goi ng t o22

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gi ve you as t i me goes on?1

MR. SIDEBOTTOM: So I ’ l l answer the2

l ast quest i on f i r s t .3

So as t hi ngs such as t he hydr ol ogy and4

t he backup and t he f or ecast ar e exact l y t he t ype of t hi ng5

we woul d seek i n our audi t r i ght s, so t hat ’ s what we woul d6

envi si on goi ng f or war d.7

So I ’ l l l eave t hat one t her e, and I ’ l l8

hand i t t o Mr . J anega f or t he second one.9

MR. JANEGA: What Nal cor pr ovi ded as10

suppor t f or t hi s document i n par t i cul ar was t he t ot al11

f i xed ener gy capabi l i t y on t hei r hydr o syst em i n12

Newf oundl and and t hei r average peak ener gy pr oduct i on.13

That was al l based of f of t hei r l owest overal l hydr ol ogi c14

data f or 60 year s. And t hat dat a was used t o cr eat e t he15

gap on t hi s graph t hat you woul d see, whi ch i s a gr aphi cal16

r epr esent at i on j ust f or pur poses of demonst r at i ng wi t hout17

t he number s, but act ual l y suppor t s t he f act t hat t her e i s18

addi t i onal ener gy above t he f i r m l oad up t o t he r ed l i ne19

t hat i s t he bot t om of t he band of essent i al l y t he20

guar ant eed sur pl us vol ume.21

So the real vol ume and t hat bl ue22

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segment t hat ’ s i n behi nd t he f ai nt bl ue sect i on t hat ’ s i n1

back i s what composes t he mi ni mum 1. 2 t er awat t s, and i t i s2

based of f of t hem cal cul at i ng f i r m l oad r equi r ement , t he3capaci t y that t hey need on t he syst em.4

So t hey bui l d t he physi cal pl ant t o5

act ual l y pr oduce t hat mi ni mum f i r m l oad based on t he6

l owest of t he 60 year s of dat a, t hen ever ythi ng above i t ,7

as t hey run t he r est of t he dat a, pr oduces t he upper8

por t i on of t he cur ve.9

So not onl y i s t he 1. 2 t er awat t s of10

ener gy avai l abl e, but i f you l ook at t he l ef t - hand si de of11

i t i n t he ear l y year s, t hat pi nk segment i s act ual sur pl us12

t hat ’ s avai l abl e t oday. The onl y t hi ng t hat eat s t hat up13

i s l oad gr owt h.14

So i f t he l oad gr owt h doesn’ t show up,15

t he f r ont end of t hat cur ve act ual l y st ays much as i t i s16

t oday.17

MR. DEVEAU: So i n t er ms of t he f i r m18

l oad, on what basi s was t hat f i r m l oad pr oj ect ed? Was i t19

based on - - I know t he report i s based on what everyone20

says Newf oundl and i s goi ng t o be t he f i r m l oad or - - I21

suppose your answer t o that i s t hey’ r e j ust goi ng t o bui l d22

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mor e i f t hey need i t .1

MR. SIDEBOTTOM: That ’ s exact l y i t .2

But i t i s based on t he f or ecast s t hat t hey pr ovi ded t o t he3

PUB i n suppor t of a f i l i ng.4

MR. DEVEAU: Okay. The next quest i on,5

t her e was - - as par t of t he or i gi nal appl i cat i on, you’ l l6

r ecal l t here was a number - - over a dozen f ormal7

agr eement s t hat wer e si gned. And one of t hem - - I ' m not8

sure I gave you t hat , Mr . Goodi ne, Exhi bi t - - Appendi x9

2. 13. And t hat was t he I nt er pr ovi nci al Agr eement ; i t ' s10

Exhi bi t M- 2( i i ) .11

And i n t hat agr eement , si mpl y an12

agreement bet ween Nova Scot i a and Newf oundl and wor ki ng13

t oget her i n cooper at i on t o ensure t he cont i nued and14

ongoi ng success of t he f or mal agr eement , and i t pr ovi des15

f or i ndemni f i cat i on i n t he event of damages caused by16

government act i ons.17

And I ' m j ust wonder i ng, i f t hat18

agr eement r el ated t o t he other agr eement s t hat are al r eady19

si gned. I ' m j ust wonder i ng wher e t hi s - - t he cur r ent20

Ener gy Access Agr eement , wher e i t st ands i n r el at i on t o21

t hat I nt er pr ovi nci al Agr eement , i f t hat ' s come up.22

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MS. TOWER : So t he I nt er pr ovi nci al1

Agr eement was r eal l y t o ensure t hat we wor ked di l i gent l y2

t o ensur e we get t he condi t i ons sat i sf i ed ar ound t he3f eder al l oan guar ant ee and move t he pr oj ect f or war d, i f I4

r emember i t cor r ect l y. And t he i ndemni t y was i n pl ace5

unt i l f i nanci al cl ose.6

MR. DEVEAU: Wel l , t her e was a7

St abi l i t y Agr eement as wel l , but I t hi nk - - -8

MS. TOWER : Okay, maybe I ' m - - -9

MR. DEVEAU: - - - t hat was separ at e.10

MS. TOWER : - - - get t i ng t hat mi xed up.11

Maybe i f you coul d j ust sor t of f l i p t hr ough t he - - -12

MR. DEVEAU: Yeah.13

MS. TOWER : - - - t he Agr eement , j ust t o14

r ef r esh my memor y.15

MR. DEVEAU: Coul d we j ust - - yeah,16

j ust f l i p t hrough - - r i ght t here. Perhaps st op t here f or17

a second.18

(SHORT PAUSE)19

MS. TOWER : Sor r y. That ' s a l ot of20

agr eement s.21

So t hi s i s t he - - I t hi nk what we22

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cal l ed t he Legi sl at i ve St abi l i t y Agr eement t hat comes i nt o1

ef f ect now upon what we cal l f i nanci al condi t i ons2

r esol ut i on dat es.3

So when we make the f i nal deci si on - -4

af t er your deci si on, we make t he f i nal deci si on t o pr oceed5

t hr ough t o f i nanci al cl ose, t hen i t i s at t hat t i me t hat6

t hi s comes i nt o ef f ect .7

Sor r y, now ask agai n your quest i on.8

MR. DEVEAU: Yeah. Wel l I guess my - -9

t he onl y quest i on was, I don' t t hi nk t he st abi l i t y - - t he10

St abi l i t y Agr eement was Exhi bi t I t hi nk 107. I don' t11

t hi nk t hat appl i ed. I t hi nk t hat was - - cont empl at ed12

somet hi ng di f f er ent .13

But I ' m j ust wonder i ng i f t her e was14

anyt hi ng - - t hi s agr eement gave t he commi t ment of both t he15

Newf oundl and gover nment and t he Nova Scot i a government t o16

basi cal l y make sur e t hat t he - - al l t he ot her agr eement s17

wer e car r i ed t hr ough on. And I ' m j ust wonder i ng i f - -18

wher e - - what ' s t he st atus of t he Energy Access Agr eement19

i n t er ms of t he r esponsi bi l i t i es of t hei r r especti ve20

gover nments?21

THE CHAIR : I t ' s excl uded f r om t hose22

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pr ovi s i ons, i sn' t i t ? I can' t f i nd t he provi s i on, but i f1

you can hel p me wi t h i t - - -2

MS. TOWER : I can say we di dn' t - - -3 MR. DEVEAU: And perhaps i f you need4

an under t aki ng, i s t hat somet hi ng t hat - - -5

THE CHAIR : Wel l , Mr . Gal l ant pr obabl y6

knows of f t he top of hi s head, does he?7

MR. DEVEAU: Yeah.8

THE CHAIR : Okay. I t hought t her e was9

a pr ovi si on i n t hi s agr eement whi ch excl uded t hi s10

agr eement f r om t hose pr ovi si ons, but I ' m l eaf i ng t hr ough11

i t , I can' t f i nd i t .12

MS. TOWER : My - - so what I was goi ng13

t o say was my r ecol l ect i on i s t hat t hi s agr eement t hat you14

wer e j ust r ef er r i ng t o di d not come up i n t he di scussi ons15

as we were negot i at i ng t he Energy Access Agr eement .16

MR. DEVEAU: Okay.17

THE CHAIR : But I ' m happy t o gi ve an18

under t aki ng i f someone want s t o conf i r m t hat .19

MR. DEVEAU: Yeah, j ust - - -20

THE CHAIR : U- 47.21

UNDERTAKING U-47 - To provide a22

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description of any protection1

provided under the Energy Access2

Agreement3

MR. DEVEAU: Okay. You' l l r ecal l i n4

t he - - you wi l l recal l i n t he - - -5

MR. SMELLIE: I ' m sor r y, Mr . Deveau,6

j ust bef or e you car r y on.7

MR. DEVEAU: Sorr y.8

MR. SMELLIE: I was di st r act ed and I9

t hi nk Mr . Gal l ant was as wel l . Can we j ust make sure t hat10

we underst and t he natur e of t he undert aki ng?11

MR. DEVEAU: The - - -12

THE CHAIR : Go ahead.13

MR. DEVEAU: I t hi nk t he quest i on14

woul d be whet her i f t here' s any pr ot ect i on pr ovi ded by t he15

I nt er pr ovi nci al Agr eement , whet her any pr ot ect i on af f or ded16

under t hat Agreement ext ends t o the Energy and Access17

Agreement - - Energy Access Agreement .18

MR. SMELLIE: Thank you, si r .19

MR. DEVEAU: Thank you.20

Okay, t he next quest i on i s i n r el at i on21

t o - - you' l l r ecal l i n t he - - i t seems a l ong t i me ago,22

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but i n t he or i gi nal hear i ng we had i n May and J une, t hat1

t her e was a l ot of di scussi on about t he change i n t er m2

f r om t he 50 year s t o t he 35 year s. And as a r esul t of3t hat , out of t hat came the suppl ement al energy that was4

del i ver ed i n t he f i r st f i ve year s.5

So one of t he quest i ons obvi ousl y t hat6

came i n as we were di scussi ng t hat at t he hear i ng was t hat7

some peopl e t hought , you know, you were - - you know, wer e8

get t i ng t hat ener gy at t he t i me when we real l y don' t need9

i t . I t woul d have been bet t er t o get i t t hr oughout t he10

t er m of t he agr eement .11

So t he quest i on now i n r el at i on t o12

t hi s opt i on f or Nal cor , i nst ead of pr ovi di ng 1. 2 t er awat t13

hour s on an annual basi s, t hey' r e al l owed t o, at t hei r14

opt i on, t o move - - f r ont l oad t hat as wel l t o 1. 8 t er awat t15

hours obvi ousl y because t hey may need i t more as t hey get16

cl oser t o 2041.17

So I ' m j ust wonder i ng i f we' r e j ust18

compoundi ng t he pr obl em and i f i t ' s real l y - - f r om19

r at epayer s - - f r om a r at epayer ’ s per spect i ve her e i n Nova20

Scot i a, we' r e get t i ng t hat ener gy at a t i me when we real l y21

don' t need i t and what t hat does t o t he economi cs of t he22

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whol e deal . I mean, at t he end of day, i t st i l l has t o be1

t he l owest cost al t er nat i ve and what does t hat do to that2

test .3

MR. SIDEBOTTOM : So t he 1. 8 i s r eal l y4

a r ecogni t i on t hat i f you' r e goi ng t o have var i abi l i t y i n5

generat i on and your average i s goi ng t o be 1. 2, you need6

some year s above 1. 2 t o al l ow yoursel f t o make t he average7

of 1. 2. So i t ' s r eal l y t o r ef l ect t he oppor t uni t y t o go8

up and down t hr ough some t i me.9

And because t he excess energy i s - -10

can undul at e t hr ough t i me and Nal cor i s obl i gat ed even11

past t he 1. 2 commi t ment t o cont i nue t o bi d, I bel i eve12

we' l l see ener gy t hr ough t he whol e per i od. Ther e' s no13

doubt t hat t her e' s mor e avai l abl e ener gy i n t he near t er m14

because t he bui l di ng of Muskrat wi l l act ual l y pr ovi de a15

f ai r l y si gni f i cant per i od of ener gy.16

But i t ' s i nt er est i ng enough t he17

suppl ement al energy that you ment i oned actual l y creat es a18

sl i ght cur t ai l ment i n t he f i r st f i ve year s, because19

t echni cal l y you can onl y get about 1. 5 t er awat t s acr oss20

t he Mar i t i me Li nk t o t he del i ver y poi nt i n t he f i r st f i ve21

year s, and so t hat act ual l y l i mi t s t he 1. 8 t echni cal l y,22

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because i t has t o be at t he del i ver y poi nt t o be served1

i nt o Nova Scot i a t hr ough t hat per i od as wel l .2

So t her e' s actual l y a bi t of an of f set3on t hat and t hen an ongoi ng obl i gat i on. So I per sonal l y4

bel i eve that t hat val ue i s t her e thr ough t he whol e t i me.5

MR. DEVEAU: Sor r y, on t hat poi nt , t he6

del i ver y poi nt ' s not def i ned i n t hi s agr eement . So you' r e7

t aki ng t he del i ver y poi nt as meani ng what ?8

MR. SIDEBOTTOM : I t ’ s a Woodbi ne9

subst at i on i n Nova Scot i a.10

MR. DEVEAU: So you' r e t aki ng t hat11

f romthe - - -12

MR. SIDEBOTTOM : From t he ECA.13

MR. DEVEAU: The ECA, yeah.14

So i n t he f i r st f ew year s dur i ng15

suppl ement al ener gy then, you' r e sayi ng t hat t he 1. 8 i s16

not possi bl e, i t woul d be const r ai ned t o 1. 5?17

MR. SIDEBOTTOM : That ' s r i ght , yes.18

(SHORT PAUSE)19

MR. DEVEAU: Okay. I ' m goi ng t o go20

back t o t hi s RES and pr i ci ng. I st i l l - - somet hi ng I21

don' t qui t e under st and. Ther e' s a di sconnect t her e or22

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somet hi ng. So I ' l l - - l et ' s go t hr ough t hat one mor e1

t i me.2

And obvi ousl y, I t ake what you sai d3

t hi s mor ni ng - - t hat Mr . O' Connor sai d economy i ndust r y4

you woul dn' t pay f or any - - f or any ot her at t r i but e, t hat5

we' r e onl y deal i ng wi t h economy energy. And bef ore we get6

t here, l et ' s l ook at - - or st art i ng wi t h - - l et ' s l ook - -7

I ' d l i ke you t o r ef er t o, and i t ' s ref er r ed t o i n Mr .8

Raphal s' s evi dence, but i t ' s your r esponse t o CASPA I R- 48,9

and i t ' s t he f i r st page of t hat . I t was Exhi bi t M- 14.10

So goi ng down t o ( d) , i n ( d) you were11

asked t o:12

13

"Pl ease pr ovi de a t abul at i on of14

t he r enewabl e energy pr oduced by15

each uni t cont r i but i ng t o16

sat i sf yi ng t he RES f or on- peak17

and of f - peak f or each mont h18

t hr ough 2050. . . "19

20

And on t he second page, you sai d,21

answer t o ( d) :22

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"Pl ease r ef er t o At t achment 3.1

Annual dat a i s pr ovi ded. Thi s2

assessment has assumed surpl us3ener gy i mpor t s are RES el i gi bl e. "4

5

And now I ' l l r ef er you t o page 3 of6

12, and t hat ' s t he t abl e t hat you pr ovi ded - - yeah. That7

was t he t abl e t hat you pr ovi ded f or - - sor r y. I di dn' t8

gi ve you t he ri ght one.9

Page 4 of 12. So t hat was t he RES10

compl i ance t abl e t hat you pr ovi ded f or t he l ow l oad. And11

under " i mpor t s" - - and i mpor t s i s - - you def i ned i mpor t s12

as i ncl udi ng sur pl us ener gy f r om t he Mar i t i me Li nk.13

And i n t her e, as you go acr oss t her e,14

you actual l y pr ovi ded RES compl i ant amount s f or each of15

t hose year s, st ar t i ng i n 2017 at 281, and t hen 201816

appr oxi mat el y al most 1, 300, and basi cal l y i t st ayed 1, 200,17

1, 300 t her e acr oss t o 2034. I t hi nk t her e' s anot her - -18

wel l , I t hi nk i t goes t o 2040 at some poi nt .19

I n any event , you' ve pr ovi ded a number20

f or RES - - t hat t he sur pl us ener gy woul d pr ovi de so much21

RES compl i ant energy, and t hat was your l ow l oad.22

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So I ' m a l i t t l e puzzl ed now why you1

woul d i ndi cat e t hat i t - - or why i t woul d be negot i at ed2

t hat you don' t want t hat RES ener gy. I ' m j ust - - a3

r at epayer i s get t i ng l ess t han what t hey wer e get t i ng4

under t he or i gi nal appl i cat i on.5

MR. SIDEBOTTOM: So I don' t bel i eve6

t hey ar e. The pr i ci ng i s t he Mass Hub pr i ci ng, whi ch i s7

an ener gy onl y pr oduct . And I t hi nk t he poi nt I want ed t o8

make around t hat i s t hat t hat energy, and I t hi nk we had a9

bi t of an exchange her e, pot ent i al l y coul d be an RES10

pr oduct under t he Mi ni st er ' s di scret i on.11

But i ndependent of t hat , t he poi nt I12

want ed t o dr aw out was t hat , i n f act , under t he l ow l oad13

or most l i kel y l oad, t her e' s suf f i ci ent RES ener gy pr e-14

qual i f i ed as i t i s t oday bet ween t he Nova Scot i a bl ock,15

whi ch i ncl udes a suppl ement al , and the pl anned RES16

gener at i on t o be i n pl ace at t hat poi nt i n t i me.17

So t hat wasn' t a - - t her e wasn' t a18

need t o r et ai n a GHG cr edi t associ at ed wi t h t hat whi ch19

Nal cor was i nt er est ed i n r et ai ni ng. We di dn' t need t hat20

t o make t hat RES compl i ance.21

MR. DEVEAU: But under t he or i gi nal22

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appl i cat i on, wer en' t you get t i ng t hat sur pl us ener gy wi t h1

t he RES at t ached t o i t ?2

MR. SIDEBOTTOM: We weren' t model l i ng3i t - - al t hough i t ' s i n t her e as a compl i ant pr oduct, i t4

wasn' t r equi r ed f or compl i ance and t her e was no pr i ce5

associ at ed wi t h an RES f act or associ at ed wi t h t hat ener gy.6

I t was a pur e mar ket pr i ce.7

MR. DEVEAU: I n t he or i gi nal8

appl i cat i on?9


MR. DEVEAU: Okay. So i f you got i n a11

si t uat i on under t hi s agr eement t hat you r ecei ved ener gy12

and i t was more economi cal f or you t o keep i t and t r y t o13

sel l your ot her ener gy, t o keep t he Nal cor ener gy and sel l14

your ot her - - you di scussed ear l i er scenar i os wher e i t15

mi ght be advantageous t o keep t he Nal cor energy and sel l16

your ot her ener gy.17


MR. DEVEAU: But i f your ot her ener gy19

i s RES compl i ant , you coul dn' t sel l t hat ot her ener gy to20

t he extent t hat i t was RES compl i ant because you di dn' t21

have any ot her ones t o r epl ace i t .22

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MR. SIDEBOTTOM: That ' s - - -1

MR. DEVEAU: I t woul d l i mi t your2

opt i ons.3

MR. SIDEBOTTOM: Wel l , we woul dn' t - -4

we woul dn' t be sel l i ng, I bel i eve, our RES compl i ant5

ener gy.6

What we do have i s 60 per cent of our7

energy can be non- RES energy, so as l ong as we keep t hat8

sal es r at i o, whi ch i s, i n f act , t he r ul e - - you know, 409

per cent of our sal es RES compl i ant - - t hen we can sel l10

i nt o t he mar ket .11

MR. DEVEAU: Okay. But t o t he extent12

t hat you woul d have recei ved more f r om Nal cor , you woul d13

have had - - you possi bl y coul d have had more RES compl i ant14

ener gy t o sel l of f , t hough, t hat you di dn' t need.15

MR. SIDEBOTTOM: Yes. And I t hi nk i t16

st i l l woul d be a mat t er f or t he Mi ni st er t o consi der17

whet her i t ' s compl i ant as i t si t s r i ght now.18

MR. DEVEAU: Ri ght . But i n t er ms of19

ot her j ur i sdi ct i ons who want t o buy i t , t hat ' s up t o t hei r20

execut i ve br anches or l egi sl at ur es t o deci de what ' s RES21

compl i ant or not .22

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MR. SIDEBOTTOM: That ' s cor r ect .1

MR. DEVEAU: I t mi ght be compl i ant i n2

Nova Scot i a, but i t mi ght not be compl i ant i n ot her3pr ovi nces or i n ot her st at es.4

MR. SIDEBOTTOM: Absol ut el y, yes.5

MR. DEVEAU: Al l r i ght .6

So we' l l go t o t he agr eement . I t ' s7

sor t of on t he same i ssue. And l et ' s go t o - - and her e,8

j ust t o gi ve you a backdrop, t he - - where I ' l l get a9

l i t t l e conf used i s t he char acter of t he ener gy that ' s bi d10

i nt o t he pr ocess ver sus t he char act er of t he ener gy t hat ,11

at t he ver y end, you pay f or and i s suppl i ed t o you.12

So l et ' s go, f i r st of al l , t o t he end13

pr oduct , page 5, def i ni t i on 3( f ) . And t hat ' s t he Ener gy14


So ( f ) t her e, you see t he Ener gy- Onl y16

Pr oduct. I t says:17

18

"Nal cor Suppl i ed Ener gy shal l be19

pr ovi ded t o NSPI as an energy-20

onl y pr oduct . For gr eat er21

cer t ai nt y, Nal cor r et ai ns al l t he22

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r i ght s and val ue associ at ed wi t h1

t he Ener gy i n r espect of Capaci t y2

and GHG Cr edi t s. "3

4

So i t t al ks t her e about t he Nal cor5

suppl i ed ener gy, and l et ' s go t o t hat def i ni t i on, whi ch i s6

on page 3.7

So t he def i ni t i on of Nal cor suppl i ed8

ener gy on page 3, i t t al ks about ener gy t hat ' s sol d and9

del i ver ed "by Nal cor t o NSPI pur suant t o the pr ovi si ons of10

t hi s Agr eement or t he Fi nal Agr eement " . And t hen:11

12

"For gr eat er cer t ai nt y, Nal cor13

Suppl i ed Ener gy i s i n addi t i on14

t o, and separate f r om, t he Nova15

Scot i a Bl ock. "16

17

So on t hese two def i ni t i ons, we t al k18

about t he Nal cor suppl i ed ener gy i s ener gy onl y, no GHG.19

I t ' s t he ener gy t hat ' s sol d and del i ver ed by Nal cor t o20

NSPI ; cor r ect ?21

MR. SIDEBOTTOM: That ' s r i ght , yes.22

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MR. DEVEAU: Okay. So l et ' s go t o t he1

f r ont - - t o t he st ar t of t he pr ocess now, and l et ' s go t o2

Sect i on 4( a) , whi ch i s t he f or ecast i ng and t he bi ddi ng.3 That ' s on page 5.4

So at t he t op t her e, you' l l see 4( a) .5

So her e, we t al k about 4( a) , Nal cor6

f or ecast . And i t says:7

8

"On a mont hl y basi s dur i ng t he9

Term, Nal cor wi l l provi de a good10

f ai t h f or ecast t o NSPI of11

Avai l abl e Ener gy. . . "12

13

And we don' t have t o go t here, but t he14

def i ni t i on - - we can go i f you wi sh, but t he def i ni t i on of15

avai l abl e ener gy i s i n t he def i ni t i on sect i on, and i t16

means:17

18

"Nal cor - gener at ed Ener gy19

( excl udi ng New Generat i on20

Devel opment Energy) t hat i s21

excess t o t he requi r ement s t o22

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meet Newf oundl and Nat i ve Load and1

t he Nova Scot i a Bl ock, up t o a2

maxi mum of 1. 8 TWh per Cont r act3

Year . "4

5

So avai l abl e ener gy doesn' t t al k about6

- - i t doesn' t t al k about economy ener gy or ener gy onl y.7

I t j ust t al ks about t he ener gy t hat ' s pr oduced by Nal cor ,8

essent i al l y, i n excess of nat i ve l oad.9

So back t o 4( a) , i t says Nal cor10

f or ecast . They have t o pr ovi de a f or ecast t o NSPI of11

avai l abl e ener gy f or ecast t o be avai l abl e f or sal e t o NSPI12

and up t o a maxi mum of 1. 8 t erawat t hour s per cont r act13

year and such f or ecast i s known as t he "Nal cor For ecast " .14

And t hen 4( b) t al ks about t he bi d, t he15

bi d i nt o NSPI sol i ci t at i on, and i t t al ks about t he Nal cor16

bi d ener gy i s t he aggr egat e of al l t he f or ecast ener gy.17

And i f you coul d go a l i t t l e l ower ,18

J ef f , 4( c) def i nes t he bi d pr i ce. And I t hi nk - - I19

suppose t hi s i s wher e i t get s - - I don' t qui t e under st and20

your st at ement s i n ter ms of how we i sol at e out t he, you21

know, t he - - what we' r e payi ng f or i n t er ms of j ust22

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economy energy.1

When we get t o the Nal cor bi d pr i ce2

under 4( c), whi ch i s t he pr i ci ng of t hi s, i t says t hat :34

"Nal cor wi l l make good f ai t h bi ds5

of Nal cor Bi d Ener gy i nt o t he6

NSPI sol i ci t at i ons. "7

8

And, of cour se, under ( i ) i t ' s I SO New9

Engl and or under ( b) i t ' s the - - or ( i i ) i t ' s the l i qui d10

t r adi ng node, t he ot her spot - mar ket - - t he al t er nat i ve11

spot - mar ket .12

So I - - i t seems t o me t her e' s a13

di f f er ent scenar i o about what i s suppl i ed and what i s bi d14

i nt o t he sol i ci t at i on. The - - what you bi d i n t he15

sol i ci t at i on under 4( a) , ( b) , and ( c) doesn' t seem t o16

r el at e at al l t o what t he def i ni t i on of economy - - of t he17

Nal cor suppl i ed ener gy i s.18

So how can you be - - why - - how ar e19

you i nt er pr et i ng t he Agr eement t o say t hat you' r e onl y20

payi ng f or economy energy when t he bi ddi ng doesn' t r ef er21

t o economy onl y ener gy?22

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MR. SIDEBOTTOM: So maybe we' l l st ar t1

wi t h t he f or ecast i ng.2

So i ni t i al l y you' r e t r yi ng t o quant i f y3

how much energy, and i t ' l l be denomi nat ed i n megawat t4

hour s or gi gawat t hour s, peak and of f peak, and t hat5

quant i t y i s of economy ener gy, t hat ' s what i t i s def i ned6

t o do, and of cour se, i t ' s def i ned by the amount of7

r esour ce mi nus the l oad. So t he f or ecast we envi si on8

havi ng wi l l r eal l y be 24 mont hs of peak and of f - peak9

val ues i n megawat t hour s.10

MR. DEVEAU: Okay, I ' ve got t o st op11

you t her e, because t hat - - I t hi nk t hat ' s wher e I mi ssed12

- - t hat ' s wher e I ' m mi ssi ng somet hi ng.13

You' r e sayi ng t hat t he bi d amount i s14

t he - - or t he bi ddi ng pr ocess - - -15

MR. SIDEBOTTOM: The bi d f or ecast ,16

yeah.17

MR. DEVEAU: - - - i s account i ng f or18

economy energy. And when I r ead t he agr eement , t he onl y19

def i ni t i on of - - f or economy ener gy t al ks about t he suppl y20

of t he ener gy, not about t he bi ddi ng. I f i t had been21

i ntended t o appl y t o both, pr esumabl y t hey woul d have sai d22

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t hat , you know, t he energy onl y pr oduct woul d be Nal cor1

bi d ener gy or Nal cor suppl i ed ener gy.2

Why i s t he def i ni t i on of a Nal cor onl y3pr oduct onl y - - onl y r el at es t o Nal cor suppl i ed ener gy,4

not t he bi ddi ng pr i ce - - t he bi ddi ng par t ?5

MR. SIDEBOTTOM: Wel l , t he - - I guess6

i t comes i n sever al pi eces. Fi r st , t he f or ecast i ng t el l s7

how much energy i s avai l abl e, and t hat ' s economy ener gy8

and t hat ' l l be i n megawat t hour s, and t he expect at i on of9

t he par t i es i s i t ' s a 24- mont h st r i p of dat a denomi nat ed10

i n megawat t hours, whi ch i s a way t o denomi nat e economy11

ener gy, and you woul d know how much was avai l abl e.12

When we go i nto t he desi gn of t he RFP13

we' l l l ook at what ' s avai l abl e t hr ough t he 24 mont hs and14

deci de how t o st r uct ur e our 12 mont hs, and t o the ext ent15

t hat i t mat ches our needs we wi l l ask f or t hat i nt o t he16

market .17

And obvi ousl y more t han Nal cor i s18

bi ddi ng on t hi s, but t hey wi l l bi d i n compet i t i vel y to19

t hat . They' r e obl i gat i on i s t o bi d i n t hei r ener gy up t o20

t he pr of i l e t hat t hey have suppl i ed us i n t hat 24- mont h21

per i od.22

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And agai n, t hat ' s al l i n megawat t1

hours whi ch i s how economy ener gy i s measured. And t hen2

t he awar d ul t i mat el y consi der s t he pr i ce of t hat economy3

ener gy as set out i n Sect i on C.4

MR. DEVEAU: So how i s GHG ener gy5

measured then i f i t ' s not megawat t hour s?6

MR. SIDEBOTTOM: I t ' s usual l y a credi t7

associ at ed and mat ched wi t h a megawat t .8

MR. DEVEAU: Wi t h an amount?9

MR. SIDEBOTTOM: Wi t h an amount . And,10

agai n - - -11

MR. DEVEAU: So - - -12

MR. SIDEBOTTOM: Oh, sor r y.13

MR. DEVEAU: Sor r y. So how - - I14

under st and t he pr ocess t ot al l y.15

MR. SIDEBOTTOM: Okay.16

MR. DEVEAU: I under st and t hat17

pr ocess; I j ust don' t under st and how you' r e at t r i but i ng18

economy ener gy onl y as par t of t hi s bi ddi ng pr ocess.19

Wher e do you get f r om t hat t he l anguage of 4( a) , ( b) , and20

( c) t hat t hat onl y appl i es t o economy ener gy?21

MR. SIDEBOTTOM: So I t hi nk i t was22

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Mr . O' Connor who sai d t he pr i ci ng nodes t hat we' ve got1

i dent i f i ed don' t have GHGs at t r i but ed t o t hem. They ar e -2

- -3 MR. DEVEAU: Oh, so t he 4, 000H4

i nt er nal hub?5

MR. SIDEBOTTOM: Yeah, t hat ' s an6

energy pr i ce. So maybe Mr . O' Connor - - -7

MR. DEVEAU: Oh, okay.8

MR. SIDEBOTTOM: - - - can hel p wi t h9

t hat .10

MR. O'CONNOR: So t hat pr i ce i s pur el y11

f or ener gy onl y. I t ' s I SO New Engl and' s, what t hey cal l12

an LMP market - - -13

MR. DEVEAU: M' hm.14

MR. O'CONNOR: - - - a l ocat i on mar gi nal15

pr i ce mar ket . The I SO, amongst many t hi ngs, cal cul at es16

t he unconst r ai ned ener gy cost i n a day ahead basi s f or17

each hour and i t i s onl y pur el y f or ener gy onl y. That i s18

i t . I t i s j ust t he ener gy component .19

The r est of t he i nst r uments avai l abl e20

i n t he mar ket , r enewabl e ener gy cr edi t s, i s one t er m t hat21

woul d be used i n New Engl and, are sol d separ at el y and22

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compl et el y apar t f r om t he ener gy. They ar e connect ed t o1

t he ener gy but t hey ar e not i n t he cal cul at i on t hat t he2

I SO woul d do and i n no way r el ated t o t he energy - - -3

MR. DEVEAU: Okay.4

MR. O'CONNOR: - - - t ransact i ons.5

MR. DEVEAU: I ' m sor r y I had t o go6

t hr ough t hat l ong quest i on - - -7

MR. O'CONNOR: No, that ' s - - -8

MR. DEVEAU: - - - but that - - -9

MR. O'CONNOR: I s i t hel pf ul ?10

MR. DEVEAU: - - - because we don' t get11

i nt o t he - - -12

MR. O'CONNOR: Yes.13

MR. DEVEAU: - - - ni t t y gr i t t y of the14

t r adi ng ever y day, pr obabl y f or a good r eason, but t hat ' s15

t he answer I ' m l ooki ng f or .16

MR. O'CONNOR: And t hat exact l y same17

met hod wi l l appl y t o poi nt t wo. I t wi l l be exact l y t he18

same - - i t wi l l be i n a di f f er ent mar ket but i t wi l l be19

onl y ener gy.20

MR. DEVEAU: Ri ght , okay.21

And t hen t he l ast set of quest i ons22

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r el at es t o Mr . Out house had t aken you t o Mr . Cher ni ck' s1

evi dence, whi ch i s - - Mr . Cher ni ck and Mr . Par ker - -2

M- 138. And Mr . Out house had t aken you t o page 19. And3t hat was t al ki ng - - t hi s i s t al ki ng about t he exchange4

agai n, Mr . Si debot t om, you had wi t h Mr . Cher ni ck at t he5

Techni cal Conf er ence and t he nomi nat i on and t he schedul i ng6

of t he ener gy.7


MR. DEVEAU: And what I ' d l i ke t o t ake9

you t o i s t he next page, t he ver y t op par agr aph t her e, and10

t he quest i on was:11

12

" I f Nal cor ener gy wer e13

uneconomi c, woul d NSPI have any14

opt i ons?"15

16

And i t says:17

18

"Dependi ng on t r ansmi ssi on19

avai l abi l i t y, NSPI mi ght be abl e20

t o sel l t he ener gy i nt o the New21

Engl and market ( mi nus22

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of a si t uat i on t hat I coul d r ecal l wher e t hat woul d1

happen. You know, i f t he t i es t o New Br unswi ck weren' t up2

and r unni ng, whi ch i s a ver y rar e occasi on, somet hi ng l i ke3t hat mi ght occur . The pr obabi l i t y of t hi s t ype of event4

occur r i ng, i n my exper i ence, i s ver y l ow. You' d have t o5

not be connect ed or have t o have some unusual const r ai nt6

occur r i ng on t he gr i d t o have t hat be t he case.7

MR. DEVEAU: I n t erms of how of t en a8

year woul d t hat happen?9

MR. SIDEBOTTOM: The - - wel l you have10

t o have a number of t hi ngs goi ng on at exact l y t he same11

t i me. So t he r el i abi l i t y of t he t i e t o New Br unswi ck i s12

ver y hi gh. I t ' s wel l over 99 per cent , I bel i eve, up t i me.13

You woul d t hen al so have t o have a si t uat i on of l ow l oad,14

and t hen you' d al so have t o have a si t uat i on of mi ni mum15

r uns bei ng met on t he uni t .16

So what r eal l y i s happeni ng i s you' r e17

t aki ng mul t i pl e l ow pr obabi l i t y event s and st acki ng t hem18

up agai nst on t op of each ot her . So i t ' s har d t o r eal l y19

say how pr obabl e i t i s, ot her t han you put mul t i pl e l ow20

pr obabi l i t y event s, one on t op of t he ot her , t o cr eat e21

t hi s scenar i o, woul d be my r eact i on t o t hat pi ece of22

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evi dence.1

MR. DEVEAU: Okay, so t he next2

quest i on i mmedi at el y bel ow t hat i s t al ki ng about whet her3

you' d be abl e to sel l t he uneconomi c ener gy.4

And t hen t he l ast quest i on at t he5

bot t om t her e - - and of cour se, you know, t her e’ s t he whol e6

quest i on of under t he agr eement whether - - you know, i t7

t al ks about your l oad r equi r ement s and so f or t h, but8

assumi ng you wer e per mi t t ed t o sel l i t , i s i t possi bl e - -9

at l i ne 22, “I s i t possi bl e t hat t he pr i ce of t he ener gy10

under t he EAA woul d si gni f i cant l y see t he cost of11

gener at i ng el ect r i ci t y f r om Nova Scot i a Power ’ s own12

pl ant s?” , and t he answer t her e was yes.13

I t t al ks about t he hour l y day- ahead14

pr i ces at I SO New Engl and exceedi ng $200 i n 2013. Then i t15

t al ks about t he var i abl e cost s f or NSPI , $45 f or i t s sol i d16

f uel pl ant s and 227 f or t he ol d oi l - f i r ed combust i on17

t ur bi nes on t he next page.18

So t hen t hey say on page 21, l i ne 3:19

20

“Even i f NSPI coul d f i nd a21

t r ansmi ssi on pat h i nt o New22

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Engl and dur i ng a pr i ce spi ke, i t1

mi ght not be abl e t o sel l t he2

power back at t he EAA pr i ce. I n3Sept ember . . . ”4

5

Whi ch I assume was Sept ember 2013.6

7

“. . . when t r ansmi ssi on const r ai nt s8

and a heat wave drove t he Hub9

pr i ce t o $426/ MWh, pr i ces i n10

Mai ne were about $116/ MWh. I f11

Nal cor had been del i ver i ng ener gy12

t o NSPI at t hat pr i ce, NSPI woul d13

l ose t he $310/ MWh di f f erence i n14

t he l ocat i onal mar ket s, i n15

addi t i on t o t r ansmi ssi on char ges16

and l i ne l osses, even i f i t coul d17

sel l t he ener gy i nt o New18

Engl and. ”19

20

So I suppose here we have a concr et e21

exampl e j ust a coupl e months ago where NSPI woul d be22

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l osi ng $310 a megawat t hour .1

So my quest i on i s, how of t en an2

occur r ence woul d t hi s be and i s t hi s not a r i sk t o3

r at epayer s?4

MR. SIDEBOTTOM: There are t i mes wher e5

t he Mass Hub does get expensi ve, and thi s out l i nes a6

moment i n t i me.7

What you’ ve al so got i s you’ ve got8

opt i ons t o hedge t he pr i ce of t hese commodi t i es as wel l .9

So we’ ve got a number of t ool s i n the10

t ool box, and so l et ’ s t ake t hi s ver y same exampl e. And we11

do have a por t f ol i o and we hedged t he por t f ol i o as part of12

t he f uel manual .13

I f t he pr i ce at t he hub was $426 - -14

and I don’ t know i f t hi s i s an hour or a day. I t ’ s15

pr obabl y mor e l i kel y an hour . But you woul d f i nd your sel f16

hedgi ng t hat , and t he hedge woul d br i ng t he pr i ce back17

down t o the economi c val ue that you expect ed i n t he f i r st18

pl ace.19

So t her e’ s a number of ways you can20

mi t i gat e t he r i sk.21

Now, r emember , we st ar t wi t h an22

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economi c choi ce i n t he f i r st pl ace. I t was t he r i ght1

choi ce of ener gy i n t he f i r st pl ace.2

So i n t hi s exampl e, i f we’ d chosen t o3t ake t hi s Mass Hub energy and i t was bel ow t he 45, we4

coul d choose, as par t of our r i sk management , t o l ock i n5

t hat , cal l i t , $40 ener gy on that day and t he per f or mance6

of t he hedge woul d pr ot ect agai nst t hat par t i cul ar7

ci r cumst ances.8

So i t ’ s an exampl e of what can happen,9

but t her e ar e ways t o mi t i gat e i t .10

MR. DEVEAU: Now, we saw i n t he f uel11

audi t case l ast year - - I t hi nk i t was t he f uel audi t par t12

of t he case - - wher e not al l hedges are - - you can’ t hedge13

agai nst ever yt hi ng.14

So I ’ m j ust wonder i ng, i s t hi s t he15

sor t of hedge t hat woul d be on the margi n or one t hat we’ d16

normal l y woul d make, or - - -17

MR. SIDEBOTTOM: Wel l , t he r eason18

we’ ve chosen l i qui d t r adi ng poi nt s i s because they al so19

come wi t h - - -20

MR. DEVEAU: Bet t er hedgi ng pr oduct s?21

MR. SIDEBOTTOM: Yeah. I t ’ s i mpor t ant22

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t o pi ck t he r i ght mar ket poi nt . Wher eas t he i nt er f ace1

bet ween New Br unswi ck and Nova Scot i a i s not a l i qui d2

poi nt - - -3

MR. DEVEAU: Ri ght .4

MR. SIDEBOTTOM: - - - and i s not as5

abl e t o be r i sk managed.6

MR. DEVEAU: Okay.7

MR. O’CONNOR: And j ust t o t he poi nt8

of l i qui di t y and hedgi ng, so Mass Hub i s used by I SO New9

Engl and par t i ci pant s r egul ar l y t o hedge. I t i s a ver y10

l i qui d and f ungi bl e pr oduct . So i t woul d have al l ki nds11

of oppor t uni t i es t o hedge f or one, t wo year s, f or peak,12

of f peak f or 25, 50, 75, 100 megawat t hour s.13

So i t ’ s qui t e l i qui d. And I woul d14

f ul l y ant i ci pat e t hat we woul d ut i l i ze t hose hedgi ng - -15

and t hat ’ s, i n f act , t he onl y way we can l ock i n t he16

val ue.17

So i f , t hr ough t he sol i ci t at i on, we18

f i nd a mont h - - f or i nst ance, i f t hi s ener gy i s $50 and,19

say, anot her f or m i s $60, we wi l l need t o hedge t o l ock i n20

t hat $10 of savi ngs f or our cust omer s. And i n t hat case,21

have we hedged, we’ r e not exposed to t hese ki nds of pr i ce22

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THE CHAIR: There’ s not much l ef t when1

i t get s t o me. I j ust want ed t o f ol l ow up on a coupl e of2

t hi ngs, and t he f i r st one i s f or you, Mr . Si debot t om.3

I ’ m goi ng t o go back t o page 31 of - -4

and i t ’ s t he same quest i on I i nt er vened wi t h Mr . Out house,5

but I ’ m st i l l not sur e I under st and i t . On page 31 of Mr .6

Cher ni ck’ s evi dence st ar t i ng at l i ne 20.7

MR. SIDEBOTTOM: Sor r y; I di dn’ t hear8

you.9

THE CHAIR: I haven’ t asked t he10

quest i on yet . I j ust want t o make sur e i t ’ s up on t he11

scr een.12

So l i ne 20 says:13

14

“The Appl i cat i on assumes t hat15

NSPI coul d pur chase economy16

energy on an hour l y basi s, when17

i t was l ess expensi ve t han NSPI ’ s18

own gener at i on. However , t he EAA19

woul d requi r e NSPI t o commi t t o20

pur chases up t o a year i n21

advance, put t i ng r at epayer s at22

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r i sk. . . t hat i s not needed or1

benef i ci al , and of mi ssi ng2

oppor t uni t i es t o pur chase ener gy3t hat woul d have reduced cost s. ”4

5

And you’ ve t al ked t o me al r eady about6

how t here woul d be an i ndex pr i ce, so t he pr i ce woul d var y7

t hr ough the year .8

MR. SIDEBOTTOM: Yes, that ’ s cor r ect .9

THE CHAIR: And you’ ve t al ked t o me10

about what you mi ght do to amel i orate t he ci r cumst ance11

wher e you had energy you di dn’ t need, and t hat i s you’ d12

sel l i t .13

But you seem t o suggest i n r esponse t o14

a coupl e of quest i ons t hat t hi s was an advant age over t he15

or i gi nal appl i cat i on, and I ’ m not sur e I have t hat poi nt ;16

i n other words, t hi s year- ahead commi t ment .17

MR. SIDEBOTTOM: So I t hi nk t he18

advant age i s around t he reservat i on of ener gy f or ce i n t he19

f i r st pl ace. And t he second i s t he l i ne of si ght 2420

mont hs out on how much ener gy i s pot ent i al l y avai l abl e i n21

t he mar ket .22

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And bot h of t hose t hi ngs ar e ver y1

si gni f i cant , so t hose ar e t he par t s t hat I bel i eve ar e2

qui t e si gni f i cant ar ound t he Ener gy Access Agr eement t hat3

you j ust si mpl y woul dn’ t t ypi cal l y f i nd your sel f wi t h i n4

most cases.5

THE CHAIR: And i s i t f ai r t o say t hat6

had you - - wi t hout t hi s agr eement , had you want ed t o7

pur chase on an hour l y basi s, i t may not be avai l abl e to8

you on that gi ven hour wi t hout t he EAA?9

MR. SIDEBOTTOM: You mi ght not have a10

per son wi l l i ng t o do t hat f or sur e, yes.11

THE CHAIR: Whi ch i s t he r eason we’ r e12

back her e t o begi n wi t h.13


THE CHAIR: Okay. I guess t hi s i s f or15

you as wel l , Mr . Si debot t om.16

Assumi ng we get t o t he poi nt where we17

have t he var i ance i ssue and Emera st eps i n and t her e was18

t hi s - - t her e’ s t hi s pr ovi si on about possi bl y Nova Scot i a19

Power bui l di ng wi nd generat i on, how do we get t o that20

deci si on?21

What process do you see Emer a, Nova22

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Scot i a Power and t he Board goi ng t hrough t o make a1

determi nat i on as t o whether Nova Scot i a Power shoul d bui l d2

somet hi ng?3 MR. SIDEBOTTOM: I woul d expect a4

t ypi cal pr ocess i n whi ch we put bef or e t he Boar d t he5

opt i ons i n whi ch we ar e l ooki ng at opt i on A, and i f t hi s6

i s - - woul d be a pr oceedi ng wher e we’ r e l ooki ng t o7

r ecommend Nova Scot i a Power bui l d the wi nd, we’ d put a8

cl ear case i n f r ont of you t hat says, under a capi t al9

i nvest ment , t hi s i s a bet t er sol ut i on f or cust omer s.10

And i f Nova Scot i a Power was st eppi ng11

i nt o t hi s posi t i on, i t woul d al so have t he avai l abi l i t y of12

t he bal anci ng servi ce as set out by Nal cor as par t of t he13

commi t ment t o f aci l i t at e t he i nt egr at i on of t he wi nd.14

And t he t wo of t hose component s we’ d15

put bef or e t he Boar d f or a deci si on, ul t i mat el y, t o deci de16

whet her Nova Scot i a Power woul d pr oceed wi t h bui l di ng a17

wi nd f ar m and ul t i mat el y pr ovi di ng t hose 300 gi gawat t s.18

THE CHAIR: So you’ r e sayi ng t hat , as19

you envi sage t hi s, Nova Scot i a Power coul d onl y repl ace20

Emera wi t h a pr oj ect t hat woul d have t o be appr oved by us.21

MR. SIDEBOTTOM: I don’ t see any ot her22

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way, si r .1

THE CHAIR: Okay. Mr . O’ Connor , t hi s2

i s f or you.3

And Mr . Outhouse t ook you t o Sect i on 64

- - I don’ t know i f you need t o t ur n i t up - - 6( a) ( i i ) of5

t he agr eement . And a concern was expr essed as t o whet her6

t he wor di ng t her e r ef l ect s t he i nt ent of t he par t i es.7

My quest i on i s, i f i t doesn’ t , what do8

we do about i t ?9

MR. O’CONNOR: So the - - as you know,10

we have t he def i ni t i ve agr eement yet t o be f i nal i zed. I t11

i s t he i nt ent of t he par t i es, us and Nal cor , t hat t hi s i s12

- - -13

THE CHAIR: Ms. Tower want s a deci si on14

f r om us way bef or e t hat so - - -15

MR. O’CONNOR: Yes.16

THE CHAIR: So what do we do about i t ?17

I f t hat agr eement as phr ased does not r ef l ect your i nt ent ,18

what do we do about i t ?19

I t doesn’ t have t o be you t hat20

answers, t he panel can answer.21

MS. TOWER: I ’ l l j ust say i t does22

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r ef l ect our i nt ent .1

THE CHAIR: You say - - -2

MS. TOWER: Bot h par t i es.3THE CHAIR: - - - i t does?4

MS. TOWER: I t does. You’ r e t al ki ng5

about t he suppl i ed ener gy - - -6

THE CHAIR: Wel l , whi ch - - -7

MS. TOWER: Si x ( 6) ( a) - - -8

THE CHAIR: I t ’ s 6( a) ( i i i ) .9

MS. TOWER: Si x ( 6) ( a) ( i i i ) .10

THE CHAIR: An exchange t hat Mr .11

Out house t ook - - t ook you t hr ough wi t h r espect t o the12

wor ds “or suppl i ed t o” and t he i nt er r el at i onshi p wi t h t he13

ot her por t i ons of t he agr eement . And I t ook you, Mr .14

O’ Connor , t o say t hat t hat , as phr ased, may not r ef l ect15

t he i nt ent of t he par t i es. Now maybe I mi ssed i t .16

MR. O’CONNOR: I - - t o be honest , I ’ m17

not 100 per cent sure now exact l y. So t he i nt ent of t he18

par t i es i s not t o doubl e- count . And t hr ough any of t he19

f or gi vabl e event s or anyt hi ng el se. So i f t hat - - i f t he20

wordi ng her e i s not cl ear t o t hat and needs t o be21

cl ar i f i ed, we wi l l do t hat - - -22

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THE CHAIR: Ri ght .1

MR. O’CONNOR: - - - to ensure - - -2

THE CHAIR: That ’ s my quest i on. How3

does t hat get done?4

MR. O’CONNOR: Yes. So - - good5

quest i on. And I under st and i t . I - - -6

THE CHAIR: I f you want t o t ake an7

under t aki ng and t al k t o t he l awyer s, t hat ’ s f i ne. But I8

woul d l i ke t o know t he answer t o t hat quest i on.9

MS. TOWER: I mean, we can t el l you i t10

i s t he i nt ent of t he par t i es, but l et us t ake t hat under11

advi sement i n t er ms of how we can mi ght gi ve you mor e12

comf or t t han our wor d - - t han t he or al t est i mony, i f13

t hat ’ s what you’ r e l ooki ng f or .14

THE CHAIR: Okay.15

And j ust f ol l owi ng up on a quest i on16

f r om Mr . d’ Ent r emont , i s t her e a dat e cer t ai n by whi ch t he17

f eder al l oan guar ant ee has t o be si gned?18

MS. TOWER: Our obl i gat i on ar ound t he19

f eder al l oan guar ant ee r eal l y f al l s af t er Nal cor ’ s20

obl i gat i on, whi ch 60 days af t er t hei r f i nanci al cl ose we21

need t o have come t o f i nanci al cl ose or at r i sk of l osi ng22

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negot i at i ng an Emer a guarantee agreement and an Emer a1

compl et i on agr eement . And we have t o act ual l y negot i ate2

t he t er ms of t he guar ant ee. Nal cor i s doi ng t hat now. We3suspect t hat t he t er ms of t he guar ant ee f or us wi l l f ol l ow4

qui t e cl osel y.5

We have t o - - so t hat woul d be6

consi der ed f i nanci al cl ose. That has t o be 60 days and7

t hen t her e ar e cer t ai n - - or 90 days, sor r y. I keep8

sayi ng 60 days. And I t hi nk i t ’ s 60 days af t er t hat t her e9

needs t o be a cer t ai n amount dr awn - - t her e ar e cer t ai n10

t i mel i nes af t er t hat .11

But I t hi nk f or us t he bi g commi t ment12

i s r eal l y f i nanci al cl ose, whi ch i s t hat 90 days af t er13

Nal cor .14

THE CHAIR: Okay.15

MS. TOWER: We’ r e j ust - - I t hi nk16

we’ r e ant i ci pat i ng t he next quest i on whi ch i s - - -17

THE CHAIR: Go ahead.18

MS. TOWER: - - - ot her commi t ment s t hat19

we have.20

THE CHAIR: That was - - -21

MS. TOWER: Mr . J anega cer t ai nl y can22

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speak t o t hose. But we’ r e - - -1

THE CHAIR: I was goi ng t o ask Mr .2

J anega - - -3

MS. TOWER: Yes.4

THE CHAIR: - - - ar e t her e ot her5

mi l est ones t hat have t o be met - - -6

MR. JANEGA: Yes, t hey are and t hey7

are - - -8

THE CHAIR: - - - t o get t he f eder al9

l oan guar ant ee i n pl ace?10

MR. JANEGA: They ar e essent i al l y11

l i nked t o t he f eder al l oan guar ant ee pr ocess. And one of12

t he commi t ment s we made as an i ndi cat i on of our i nt ent i on13

t o pr oceed i s t he advancement of maj or awards of work t hat14

ar e pendi ng our out come of t hi s process.15

So t he r eason t hat we’ r e l i nked i n t o16

t hose i s we want t o at t ai n t he assurance or a cer t ai nt y17

ar ound t he deci si on f r om t he Boar d and under st and t hat18

bef or e the f i nal awar d of some of t hose maj or cont r act s.19

Ri ght now t her e ar e a f ew of t hose t hat we have been abl e20

t o ext end t he t i mel i ne. We have an agr eement f r om21

suppl i ers but t hi s mont h i s when we need t o be concl uded22

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wi t h t hose.1

THE CHAIR: Okay. Probabl y been her e2

t oo l ong when the wi t nesses can ant i ci pat e my quest i on.3 MR. JANEGA: Wel l , our - - we wer e4

ant i ci pat i ng but we wer e hopi ng t he end of - - you know, i f5

we’ r e t o t r y and concl ude - - and one of t hem i s a f ai r l y6

maj or cont r act , val ue and i mpor t ance t o t he pr oj ect - - by7

t he end of next week was when our schedul e and our8

t i mel i ne was when we had hoped t o have an under st andi ng of9

t he out come of t hi s.10

THE CHAIR: That may be di f f i cul t .11

MR. JANEGA: We under st and t he Boar d’ s12

need t o t ake t i me t o consi der t he appl i cat i on. We r espect13

t hat .14

THE CHAIR: Okay. I t hi nk t hat ’ s what15

I have.16

Any quest i ons ar i si ng out of Boar d17

quest i ons?18

Mr . McGr at h?19

MR. MAHODY: J ust - - t he Consumer20

Advocat e has one, Mr . Chai r .21

THE CHAIR: Okay. I ’ ve asked - - Mr .22

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McGr at h’ s l i ght went on f i r st so I ’ m goi ng t o l et hi m go1

f i r s t . 2

MR. McGRATH: J ust a f ol l ow- up, Mr .3

Chai r , on your quest i on f or t he panel .4

FURTHER CROSS-EXAMINATION BY MR. McGRATH5

MR. McGRATH: I t r el at es t o t he6

quest i on t hat t he Chai r asked about i f we wer e i n a7

var i ance si t uat i on and NSPI want ed t o bui l d new gener at i on8

and t he pr ocess of get t i ng t hat back t o the Boar d.9

I ’ m j ust l ooki ng at t he pr ovi si on i n10

t he Agr eement on page 10 ( f ) . I t act ual l y r ef er s to an11

NSPI opt i on but not obl i gat i on t o ei t her const r uct or12

cont r act.13

And so my quest i on i s, woul d you14

envi si on t hat i n t he si t uat i on wher e t her e was a cont r act ,15

r at her t han NSPI const r uct i ng di r ect l y, woul d t hat al so16

t her ef ore need t o get t o t he Boar d somehow f or some sor t17

of appr oval ?18

MR. SIDEBOTTOM: I t hi nk i t ’ s been t he19

Boar d’ s t ypi cal pr act i ce t hat cont r act s ar e r evi ewed as20

par t of a - - l i ke t he pr ocur ement of ener gy. As par t of21

t he FAM we woul d expect a f ul l scr ut i ny thr ough t hat22

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pr ocess of si mi l ar l y l ooki ng t hat i t was t he l owest cost1

sol ut i on f or our cust omer s.2

I haven’ t t hought of i t so much i n3t hat l i ght but def i ni t el y i n a capi t al appl i cat i on i t4

woul d be bef or e the Boar d f or t he deci si on.5

THE CHAIR: Act ual l y, I don’ t know t he6

answer t o t hi s quest i on, but now t hat we have the7

r enewabl e el ect r i ci t y admi ni st r at or , can you even pr ocur e8

st uf f wi t hout hi s per mi ssi on? I don’ t know.9

MR. SIDEBOTTOM: We woul d have t o10

cr oss t hat hur dl e as wel l .11

THE CHAIR: Maybe Mr . McGr at h knows12

t he answer t o t hat quest i on.13

MR. McGRATH: Possi bl y.14

THE CHAIR: Mr . Mahody?15

MR. MAHODY: Thank you, Mr . Chai r .16

CROSS-EXAMINATION BY MR. MAHODY17

MR. MAHODY: Mr . O’ Connor , I want t o18

r etur n t o quest i ons t hat Commi ssi oner Deveau was aski ng19

you about t he gr een at t r i but es i n t he Nal cor bi d ener gy.20

And Commi ssi oner Deveau t ook you t hrough a det ai l ed21

wal kt hr ough of t he Agr eement and t he f act t hat t he Nal cor22

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suppl i ed ener gy under your Agr eement i s speci f i cal l y1

def i ned t o excl ude t he gr een ener gy at t r i but es.2

And when you wer e t hen asked what t he3

basi s i s t hat you’ r e sayi ng t hat t he Nal cor bi d ener gy i s4

al so t o excl ude t hose gr een at t r i but es, you t ook us t o5

Cl ause 4 ( c) 1 l i t t l e i , whi ch i s t he Mass Hub pr i ci ng.6

And that ’ s t he Mass Hub pr i ci ng we’ r e7

al l t oo f ami l i ar wi t h as bei ng t he basi s on whi ch t he8

ent i r e appl i cat i on was made back i n J une; cor r ect ?9

MR. O’CONNOR: Yes, that ’ s cor r ect .10

MR. MAHODY: Okay. Now under Cl ause 411

( c) Roman at ( i i ) , what i s t he basi s i n t hat cl ause f or12

you sayi ng t hat t hat bi d ener gy i s excl usi ve of any gr een13

at t r i but es?14

MR. O’CONNOR: So t he t wo i s anot her15

way to descr i be t he Mass Hub node. So t he Mass Hub node16

i s a l i qui d t r adi ng node wi t h associ at ed publ i shed f or war d17

pr i ci ng and i t ’ s an al t er nat i ve - - i t ’ s a spot mar ket . So18

t hose ar e the char act er i st i cs of Mass Hub.19

MR. MAHODY: I t ’ s your under st andi ng20

t hat Cl ause 4 ( c) sub ( i i ) i s descr i pt i ve of t he Mass Hub?21

MR. O’CONNOR: I t ’ s a di f f erent22

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mar ket . I t ' l l have a di f f er ent name but i t has exact l y1

t he same char act er i st i cs.2

MR. MAHODY: And you have some3assurance that Nal cor shar es your under st andi ng i n t hat4

r egard, do you?5

MR. O'CONNOR: Absol ut el y, yes. Thi s6

i s ener gy onl y we' r e pur chasi ng f r om t hem.7

MR. MAHODY: Thank you.8


Any ot her quest i ons?10

MR. BLACKBURN: You probabl y di dn' t11

see my - - -12

THE CHAIR: I di dn' t see your l i ght ,13

but I see your hand.14

MR. BLACKBURN: Mr . Mer r i ck' s - - t he15

t op of hi s head was - - t he gr ey hai r s or what ever .16

THE CHAIR: Go ahead.17

MR. BLACKBURN: J ust ar i si ng out of18

your quest i ons, Mr . Chai r and panel , deal i ng wi t h t he19

f eder al l oan guar ant ee.20

FURTHER CROSS-EXAMINATION BY MR. BLACKBURN21

MR. BLACKBURN: I j ust want t o be22

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cl ear , perhaps i t doesn' t mat t er who answers - - maybe Ms.1

Tower . The f eder al l oan guar antee i s not condi t i onal on2

t hi s Boar d appr ovi ng t he Li nk Pr oj ect , i s i t ?3

I mean, t hi s i s somet hi ng you - - t hat4

t he gr oup want s, obvi ousl y, but i t ' s not - - t he Gover nment5

of Canada i s not sayi ng t hat our guar ant ee i s subj ect t o6

appr oval of t hi s Boar d.7

MS. TOWER: What t he Gover nment of8

Canada - - one of t he condi t i ons i s t hat i t have an9

i nvest ment gr ade cr edi t r at i ng, and t o get t hat i nvest ment10

gr ade credi t r at i ng i t needs, r eal l y, i n sor t of a bi t of11

a r ound- about way, but essent i al l y, i t needs t he appr oval12

of t he Boar d or i t needs a r egul at or y appr oval t o be abl e13

t o get t hat i nvest ment gr ade cr edi t r at i ng t o make i t14

el i gi bl e f or t he f eder al l oan guar ant ee.15

So i n a r ound- about way, yes, i t does.16

MR. BLACKBURN: I sn' t t he pr emi se of17

t he f eder al l oan guar ant ee mor e j ob cr eat i on and cr eat i ng18

empl oyment and so f or t h f or Newf oundl and and Nova Scot i a?19

MS. TOWER: So I t hi nk t he f eder al20

government want s cer t ai nt y ar ound t he recover y of t he debt21

so t hat t hey don' t have t o st ep i n t o pay the debt on22

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behal f of l ender s - - or on behal f of us i f we wer e t o1

def aul t .2

And so what t hey need to do i s assure3t hemsel ves t hat t hey' ve got - - t hat t hey' r e guar ant eei ng a4

pr oj ect t hat has a ver y st r ong busi ness case.5

And one of t he ways t hey do that i s t o6

ensur e that t hey - - t hat i t has an i nvest ment gr ade cr edi t7

rat i ng.8

So t her e ar e cer t ai n t hi ngs t hat9

St andard & Poors woul d need t o assure t hemsel ves of t hat10

or t o gi ve us t he i nvest ment gr ade cr edi t r at i ng. We' ve11

been t hr ough i t on an i ndi cat i ve basi s.12

And one of t he thi ngs t hat t hey were13

ver y i nt er est ed i n i s t he - - i s t he - - how i t woul d wor k14

under r egul at i on, i f you wi l l . And so t hey woul d be - - t o15

get t he ul t i mat e i nvest ment gr ade cr edi t r at i ng,16

essent i al l y, we need t he appr oval of t hi s Boar d.17

THE CHAIR: Anybody el se bef ore I go18

t o Mr . Out house?19

Mr . Out house.20

MR. OUTHOUSE: Mr. Chai r , I j ust21

r eal l y want ed t o cor r ect somet hi ng I ' d put t o the panel ,22

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NSUARB-ML-2013-01/M05419 Page 2893


and i t bear s on Commi ssi oner Deveau' s - - or Vi ce- Chai r1

Deveau' s quest i ons about t he gr een cr edi t s.2

And I ' d r ef er r ed t o a sect i on of t he3

Act whi ch was t he def i ni t i on of r enewabl e l ow i mpact4

ener gy when, i n f act , t he def i ni t i on t hat ' s r el evant f or5

t hi s pur pose i s r enewabl e el ect r i ci t y.6

And one of t he component s of t hat was7

not t he one that I gave, but r enewabl e el ect r i ci t y means8

al l of t he f ol l owi ng. Ther e ar e t hr ee i t ems. The f i r st9

one i s her i t age r enewabl es, second one i s r enewabl e l ow10

i mpact el ect r i ci t y generat ed af t er December 31st , 2001.11

And t he l ast one i s i mpor t ed el ect r i ci t y that , i n t he12

opi ni on of t he Mi ni st er , i s gener at ed f r om r enewabl e13

r esour ces.14

So I t hi nk i t comes down to t he same15

t hi ng, t hat i s, i t ' s a Mi ni ster i al di scr et i on whet her or16

not t he i mpor t ed el ect r i ci t y i s gener at ed f r om r enewabl e17

r esour ces.18

THE CHAIR: Okay. Thank you.19

Any r e- di r ect , Mr . Smel l i e?20

MR. SMELLIE: No, t hank you, si r .21

THE CHAIR: I t ' s now 20 past 4: 00. We22

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were pr epar ed t o si t l ate i f we needed t o, but my sense i s1

we don' t need t o. We have t he t wo i nt ervenor wi t ness2

panel s t omorr ow, but we have al l day.3 MR. OUTHOUSE: We al so have Mor r i son4

Par k.5

THE CHAIR: Sorr y, yes. We al so have6

Morr i son Par k. But I woul d have t hought we coul d do al l7

of t hat t omor r ow.8

I ' m l ooki ng ar ound. And I don' t want9

t o sor t of get Mr . Cher ni ck on t he st and and t hen have Mr .10

Mer r i ck not abl e t o t al k t o hi m f or t he sake of savi ng 1011

mi nut es, so I don' t t hi nk - - -12

MR. OUTHOUSE: I ' m sur e bot h Mr .13

Cher ni ck and Mr . Mer r i ck woul d pr ef er i f you di d t hat , but14

I ' m not encour agi ng you t o go on.15

THE CHAIR: Wel l , Mr . Mer r i ck, i f16

you' d pr ef er I do i t , I wi l l , but I t hi nk we' l l come back17

at 9 o' cl ock t omorr ow morni ng.18

Al l ri ght . Thank you, panel . I19

usual l y t hank t he panel , so t hank you, panel . Appr eci at e20

your evi dence.21

- - - Upon adj our ni ng at 4: 17 p. m.22

8/13/2019 4309 NSUARB-ML-Nov 14, 2013


Documents

4309 NSUARB-ML-Nov 14, 2013